OK, so I'm sure this has been brought up before..
But if you have a Paypal account, will the IRS be notified on your income?
I doubt it. But if you're receiving money through PayPal for a business, you should be reporting your income on your taxes.
I'm sure they may monitor a person account if large substantial amounts of money are going through it! I know that this year Canada Revenue has done a crackdown on Ebay sellers here in Canada who are not reporting there income on goods sold through Ebay...which I would think includes Paypal....Quite a huge fine as well....so I think it is up to you to report it or you will be audited!
Soon they will. There was a provision in the housing act passed last year that will requires processors like PayPal to issue 1099 forms to the IRS, so it will get reported eventually.
I'm sure my opinion is in the minority, but good! It's about time that the IRS does something to combat the ever-prevalent (sp?) problem of people not reporting their income. I'm not saying cake decorators are guilty of it, I'm not saying that everyone is guilty of it, but there are so many people in this country that do not report all of their income and pay taxes on it.
Here's a little food-for-thought (no pun intended)........if EVERYONE reported ALL of their income and paid tax on it, this country could have a tax rate of 2%. But instead, we have rates that go up as high as 35%, all because there is tons of $$ out there that taxes are not being paid on.
I'll step off my soap box now, it's just a big pet peeve of mine. And yes, I'm an accountant and see our clients try to weasel their way out of paying the taxes they legitimately owe, and it pisses me the hell off and disgusts me. It's part of the reason I want out of what I'm doing.