Do you live somewhere other than America, are an American citizen and sell junk on eBay for the fun of it? Welcome to Section 6050W.
Under new rules added to the US Tax Code in January 2012, credit card processing companies must now collect and verify the tax identification number (TIN) and legal name associated with that number for each merchant customer.
Section 6050W of the US Internal Revenue Code now requires merchant-acquiring entities in the US such as American Express to document the status of any US or foreign business they settle transactions with….
The new law represents another effort by the US government to boost transparency and possible tax collection for Americans overseas.
Well, that’s great, so how might IRC Section 6050W affect you? On this, PayPal writes:
PayPal will track the payment volume of your account(s) to check whether your payment volume exceeds both of these levels in a calendar year:
- $20,000 USD in gross payment volume from sales of goods or services in a single year
- 200 payments for goods or services in the same year
You may be asked to add your tax ID number, such as a Social Security Number (SSN) or Employer Identification Number (EIN), to your existing account(s), if you don’t already have one on file.
If you cross the IRS thresholds in 2012, PayPal will send Form 1099-K to you and the IRS for the 2012 tax year in early 2013.
So, if you live in China and sell 200 pencils to 200 customers for 200 Renminbi, add form 1099-K to the many other forms your expensive tax preparer will be delighted to fill out for you.