PayPal Confirms Taxpayer Status (What It Means, How To Do It + More)
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Paying taxes is something that happens every year, and in order to pay taxes, the IRS keeps track of your information.
If you’ve recently received an email or message from PayPal asking you to confirm your taxpayer status, you may be wondering what this means and how to do it. I researched PayPal and why it needs your taxpayer information and here’s what I found!
Why is PayPal requiring confirmation of my taxpayer status in 2022?
PayPal requires you to confirm your taxpayer status because the IRS requires PayPal and all other payment processors to report received commercial transactions of $600 or more. Additionally, if you receive a commercial transaction of $600 or more, you must provide PayPal with your taxpayer identification number, TIN, and any other requested information.
If you want to learn more about how to confirm your taxpayer status, what your TIN is, and more, keep reading!
What does confirming your taxpayer status mean?
Confirming your taxpayer status means providing PayPal with the personal information you need to be able to provide the necessary information to the US government.
The IRS requires PayPal to “provide the IRS with information about customers who receive payment for sales of goods or services through PayPal.”
Additionally, PayPal must report if you receive payments for goods or services that exceed “certain transaction and payment volume thresholds.”
Additionally, starting January 1, 2022, the reporting threshold for commercial transactions or sales of goods and services is $600 or more.
As a result, anyone selling goods or services close to $600 in 2022 will be asked by PayPal to “confirm their taxpayer status.”
How do I confirm my taxpayer status on PayPal?
As mentioned, PayPal will ask you to “confirm your taxpayer status” when you’re approaching or reaching $600 in sales of goods or services in 2022.
When you approach or reach this limit, PayPal will send you a notification via your PayPal account and email stating that you need to confirm your taxpayer status with a link.
Additionally, you will need to click on the link in the email or account notification and enter the requested information.
Additionally, PayPal will ask for your TIN (Taxpayer Identification Number), the most important piece of information about your taxpayer status.
In addition, the information you provide to PayPal will be compared to IRS filings, the same information you provided on IRS Form W-9.
Fortunately, if there is a mismatch, you will have three (3) chances to view and edit the information.
Additionally, PayPal will also ask for your address and “prove your information” if the information continues to mismatch and cannot be verified.
Another important piece of information is that if you have multiple PayPal accounts, you must verify the taxpayer status of all of these accounts.
In addition, if the IRS notifies you that you are currently subject to “backup withholding”, PayPal will ask you to call customer service at 1 (888) 221-1161
If you are calling from outside the United States, you may also call 1-402-935-2052 instead of submitting your information online.
What is my taxpayer identification number?
You can use several different identification numbers for your taxpayer identification number. You can use the following:
- SSN, Social Security Number
- EIN, Employer Identification Number
- ITIN, Individual Taxpayer Identification Number
- ATIN, Taxpayer Identification Number for U.S. Pending Adoptions
- PTIN, Preparer Taxpayer Identification Number
Additionally, the company will accept your EIN, SSN or ITIN when providing PayPal with your TIN.
What happens if I don’t provide PayPal with my taxpayer identification number?
Unfortunately, if you do not provide PayPal with the required information, such as your TIN, the company may restrict your PayPal account until you provide it.
PayPal may place restrictions on your account, such as:
- prevent you from sending money
- prevent you from getting paid
- prevent you from closing your account, or
- prevent you from deleting or changing your information
Therefore, to remove these restrictions, you will need to provide PayPal with the required information, including your TIN.
To learn more, you can also read our posts on PayPal charged me twice, PayPal collections, and PayPal’s age requirements.
in conclusion
Confirming your taxpayer status is providing PayPal with your TIN and any other requested information. Additionally, PayPal will ask you to provide this information in order to verify it with the IRS, which can track your income for tax season.
Additionally, you can confirm your taxpayer status with PayPal by clicking the link sent to you in the email or PayPal account notification and providing the required information. Additionally, PayPal will accept your SSN, EIN or ITIN as your TIN.
