Well it seems the IRS has begun to move into the 21st century and begun requiring Paypal and other US Payment providers to obtain users tax id numbers, which includes their Social Security Number (SSN) or Individual Tax Identification number (ITN), or your Employer Identification Number (EIN). So Paypal has begun to email U.S. based Paypal users asking for their Social Security Number or SSN.
While users have always been obligated to report any earnings received through Paypal, I would imagine MANY users “forgot” to report those earnings to the IRS. Now, Paypal users in the U.S. must provide Paypal with their SSN, and if they refuse, they will have their account “limited”, and by limited, we mean frozen. You won’t be able to transfer money out of Paypal if you don’t provide your SSN.
Paypal will use the SSN numbers to file form 1099-K with the IRS. However, the one bright spot, for those smaller operators using paypal to receive payments:
Paypal will NOT send the 1099-K form to the IRS unless BOTH of the following milestones are met:
- You receive $20,000 or more in payments for Goods and/or Services in the calendar year
- You receive more than 200 payments in a calendar year
So, again, if you don’t make a lot of money through Paypal, don’t be concerned about giving your SSN to PayPal. If you do receive a lot of payments through then expect to pay up with Uncle Sam this year, though I’m sure you already were reporting all that PayPal income, right?