Tax information reporting for online sellers

Everything you need to know about IRC Section 6050W

Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including PayPal, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal.

PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. In order to help you understand these information reporting obligations, we have prepared the following FAQs. After reviewing the following FAQs, we recommend you consult your tax advisor to assess tax implications of Form 1099-K reporting.

If you’ve recently received a notice to update your PayPal account(s) information, please download the following PDF guide and refer to the FAQ’s.

FAQ

Under the IRC Section 6050W, PayPal is required to report to the IRS the total payment volume received by US account holders whose payments exceed both of these levels in a calendar year:

  • US$20,000 in gross payment volume from sales of goods or services in a single year
  • 200 separate payments for goods or services in the same year

IRC Section 6050W applies to all payment processors, including PayPal. Our goal is to help PayPal sellers understand and comply with the requirements.

1

Updating your PayPal account(s) information


PDF Guide
Instructions on how to update your PayPal account

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IRS 6050W


Sample Form 1099-K
An example Form 1099-K provided by the IRS.