Paypal Dangers?


thewoodwhisperer

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Here's what PayPal says about IRC6050.

Again, I am "enrolled to practice before the IRS" and I have participated in Professional Continuing Education of this tax topic.

The sky is NOT falling and I think I'll go cut some wood. :)

Most of us that are involved in corporate business have or have had a PTIN. I have a law degree, does not make me a lawyer.

Don

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I'm a Circular 230 Tax Professional. I taught tax law for four years. I still consult and maintain my Professional Continuing Education .

Woodworking (crafting) is now my main profession.

The sky is still NOT falling and I have more wood to cut. :)

Never heard of a circular 230 professional. Its been a long time but off the top of my head if memory serves me. Circular 230 is the written rules for tax professionals such as RTRP's ,EA's , CPA's .............and lawyers persuant title 31 $ 330 of the US code authorized by title 5 of the US code $ 500 may be 550 cant remember for sure. Practitioner is the circular term used to describe all that fall this catagory to include the kid that does your taxes in Walmart a RTRP.

Nobody says the sky is going to fall but the tax implications are real.

Don

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Practitioner is the circular term used to describe all that fall this catagory to include the kid that does your taxes in Walmart a RTRP.

The law changed some time ago. All tax preparers must be at least an "enrolled preparer", which involves an application, proof of training, background check, competency examination and proof of continuing education. Regulations and requirements for Enrolled Agents requires a lengthy education and a comprehensive exam, very similar to a bar exam but for taxes only.

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The law changed some time ago. All tax preparers must be at least an "enrolled preparer", which involves an application, proof of training, background check, competency examination and proof of continuing education. Regulations and requirements for Enrolled Agents requires a lengthy education and a comprehensive exam, very similar to a bar exam but for taxes only.

EA's take the SEE preparers do not. Prepares have their own simple exam.

"BTW, The current threshold for 1099K reporting requirements for credit card intermediates is set at: $20,000 AND 200 or more transactions."

Think again, compliance audits are plenty of leverage for 100% reporting even if its only a buck. Give it time.

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EA's take the SEE preparers do not.

Registered Tax Return Preparers have their own competency test, different from EA's.

Quote from the IRS regulations:

-------------------

a. Registered Tax Return Preparers

1. Will there be a practitioner designation for preparers who pass the return preparer competency test? (revised 9/28/10)

Yes. Individuals who are eighteen years or older who pass the return preparer competency examination and a suitability check will be designated Registered Tax Return Preparers.

2. What practice rights do Registered Tax Return Preparers have? (posted 1/22/10)

Registered Tax Return Preparers have the right to prepare tax returns and claims for refund. RTRPs also may sign the tax returns that they prepare as the return preparer and they may represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the IRS (including the Taxpayer Advocate Service) during an examination if they signed the tax return or claim for refund for the tax period under examination.

3. Is there a distinction between Enrolled Agents and Registered Tax Return Preparers? (posted 1/22/10)

Yes. The practice of enrolled agents before the IRS generally is not limited. The practice of Registered Tax Return Preparers is limited to preparing and signing tax returns for compensation and representing taxpayers before an Examination function of the IRS when the Registered Tax Return Preparer prepared the return under examination.

4. When can I use the Registered Tax Return Preparer designation? (posted 11/9/11)

You can use the Registered Tax Return Preparer designation when you receive the Registered Tax Return Preparer certificate from the IRS. Once you become a Registered Tax Return Preparer, you must display the following disclaimer in any paid advertising involving print, television or radio, in which you represent yourself as a Registered Tax Return Preparer:

“The IRS does not endorse any particular individual tax return preparer. For more information on tax return preparers go to IRS.gov.”

As a Registered Tax Return Preparer, you must complete your annual continuing education requirement and renew your PTIN annually. If you do not complete these requirements or otherwise fail to comply with Circular 230, you may be suspended or disbarred from practice before the IRS. Individuals who have been suspended or disbarred from practice before the IRS are precluded from using the Registered Tax Return Preparer designation.

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What the IRS says about 1099-K forms:

------------------------------

Understanding Your 1099-K

The 1099-K is a new IRS information return for reporting electronic financial transactions to improve voluntary tax compliance. You should receive a 1099-K by the end of January 2012 if, in 2011, you received payments from merchant cards (e.g., debit or credit cards) or

third party payment networks (e.g., PayPal or Google Checkout) at or above our minimum reporting thresholds:

  • Gross payments that exceed $20,000; AND
  • More than 200 such transactions.

Report 1099-K Income

Report the gross receipts or sales from all business operations (including gross receipts or sales included in any amounts reported on Form(s) 1099-K.

If you get a Form 1099-K for amounts that belong to another person, or are a co-owner who may need to file a Form 1099-K or other information returns for other owners, check the General Instructions for Certain Information Returns.

Make sure the merchant card or third-party clearing house has your correct Taxpayer Identification Number (TIN) by checking the TIN on Form 1099-K against the TIN you reported on Form W-9.

More Info

If you have questions about the amount reported, contact the filer (see the upper left corner of Form 1099-K). If you have questions about the merchant or third party transaction network, find the contact in the lower left corner of Form 1099-K.

-----

If you received a 1099-K it is either necessary or a mistake. I don't know your facts or context.

The issuance of 1099-K's isn't an indictment of guilt, nor is it an attempt to wipe-out illegitimate business practices. The IRS, which actually directed by Congress, does not want to destroy small businesses.

Compliance, audits and proper record keeping are not meant to be punitive, threatening or punishing. They are just part of the system.

Hysteria, hyperbole and histrionics doesn't make this a matter of impending doom.

BTW, the professional tax and accounting software I use can generate 1099-K forms in any amount for any person or business, even if it is invalid.

You might want to consult with a tax professional before you self-interpret yourself in to a messy corner. :)

IMNSHO, this is a good time to go in to business, whether as a "hobby business" or a "professional business."

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Hobo,

The text you copy and pasted just restates what I have said and contradicts yourself. My 1099k posted above is not a mistake, its very accurate. Its an account that was opened to track out of state sales. As you can see there were none. The dollar is the test transaction. 20K is the minimum reporting standard most processors will and are reporting 100% of all transactions on the 1099k. Like yourself Im not using google for my information. Im not claiming any impending doom just the fact that the new rules are going to have a drastic affect on businesses and that its going to have sever penalties for those that choose to sell there wares and pocket the cash.

Don

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Hobo,

The text you copy and pasted just restates what I have said and contradicts yourself. My 1099k posted above is not a mistake, its very accurate. Its an account that was opened to track out of state sales. As you can see there were none. The dollar is the test transaction. 20K is the minimum reporting standard most processors will and are reporting 100% of all transactions on the 1099k. Like yourself Im not using google for my information. Im not claiming any impending doom just the fact that the new rules are going to have a drastic affect on businesses and that its going to have sever penalties for those that choose to sell there wares and pocket the cash.

Don

I clearly said,

"If you received a 1099-K it is either necessary or a mistake. I don't know your facts or context."

I clearly cited real references to support my PROFESSIONAL OPINIONS.

The penalties for those that cheat haven't changed.

You stated that,

"Paypal is just going to get you audited. 99% of paypal based businesses are that way for the purpose of tax evasion.”

Please cite a reference. You are allowed to use Google. :)

I really am a trained and licensed tax professional. I still do tax work part-time and I take annual continuing education to maintain my license.

I'm also now a full time wood crafter. Therefore, I'm going back to my studio to and do the main theme of this forum.

I think I'm/we are being trolled. :(

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