PayPal is required to report all transactions that are tagged as purchases to the Internal Revenue Service (IRS), even if it was a mistake. Although this transaction is reportable by PayPal, it's possible that the transaction isn't taxable. It's always best to speak with a tax professional for any specific concerns you may have. 

Please note that you'll still be required to provide your Tax ID number if your activity meets or exceeds the reporting threshold. You can learn more about what to expect for the tax season in our Help Centre.