Paypal holding my funds for a goods and service receipt - Need advice on how to deal with PayPal for 24% IRS Backup Withholding

Status
Not open for further replies.
I think PayPal having one's SSN is the least of anyone's problem...despite the fact that I do not like intrusion into all of our personal data.

But having been exposed to the OPM data breach as well as others, private and governmental, I feel like an old hand at this and will say only this:

Assume your data is already in the hands of the ne'er-do-wells and just get on with your life. Take reasonable precautions online and against phishing and malware and don't let the bastards ruin your day.

That's how I deal with it...it's served me well so far.
 
Yeah I'm screwed... They told me there's nothing i can do, my money is on hold till November, and to boot they are going to deduct $229 from my money to send to the IRS w/o any actual supporting documentation so I can't declare this in my 2023 taxes either as its sent "john doe" status...

They said I gave them my consent to this when i put my email address in to PayPal - my written acceptance of all their terms of service that allows them to do this. =(
 
madcap_magician said:
OP got screwed by the American Rescue Plan Act of 2021, not by PayPal, which is just complying with their legal requirements.

OP unable to fix getting screwed because he is unwilling to provide his SSN, which PayPal needs in order to issue tax documents they are now required to create because of the ARPA. I assume PayPal still requires this even though the effective date of this policy change was delayed (initially would have applied to 2022 taxes but now applies to 2023 taxes unless delayed again or repealed) since they have no way of knowing if it will be repealed or if they're just going to need to issue next year after all.

Since he was screwed and is unwilling to do what is necessary to get un-screwed... guess he just stays screwed.
Click to expand...
only partially correct. Paypal does not gate the payments coming in. When I challenged this, they supervisor said "you agreed to automatically accept these payments when you entered your email and clicked "accept".

Laws be what they may, PayPal could at least add a prompt to say "You received a $5000 payment from Mr. XYZ, do you want to accept this?" Especially for accounts that don't have/want to supply a TIN, understanding that this will automatically go into 24% mode.
 
Last edited:
It seems like the easiest solution is to just give PayPal your SSN number. I would now do that, if if I decided to sell more knives using PayPal. My identity was already stolen already last year, probably through one of the data breaches, so the thieves have all my data, along with many other unsuspecting citizens. Sign in to each of the four credit agencies and put a freeze on your files. It’s free, and now the thief can’t open a new credit card in my name which they already did. The SSN system of identification is seriously flawed, and completely vulnerable, so PayPal having it is not my biggest worry anymore.
 
Last edited:
stonesell said:
It seems like the easiest solution is to just give PayPal your SSN number. I would now do that, if if I decided to sell more knives using PayPay. My identity was already stolen already last year, probably through one of the data breaches, so the thieves have all my data, along with many other unsuspecting citizens. Sign in to each of the four credit agencies and put a freeze on your files. It’s free, and now the thief can’t open a new credit card in my name which they already did. The SSN system of identification is seriously flawed, and completely vulnerable, so PayPal having it is not my biggest worry anymore.
Click to expand...
Exactly the type of headache I'm working to avoid lol

I have a great disrespect for PayPal and how they treat their customers. I do not want them to "own me" like that as today is a reminder of how much they treat you like trash if an issue happens.

I'll just have to own this loss and move on with the knowledge.

Hopefully this thread at least educated even one other person to avoid this issue. If so, the cost of the lesson learned is a bit more stomachable.

Been communicating with the buyer, and he's being super cool about things, so that's a plus.
 
p64imp said:
Exactly the type of headache I'm working to avoid lol

I have a great disrespect for PayPal and how they treat their customers. I do not want them to "own me" like that as today is a reminder of how much they treat you like trash if an issue happens.

I'll just have to own this loss and move on with the knowledge.

Hopefully this thread at least educated even one other person to avoid this issue. If so, the cost of the lesson learned is a bit more stomachable.

Been communicating with the buyer, and he's being super cool about things, so that's a plus.
Click to expand...
Your thread is definitely educational in helping others to avoid the hellish 24% PayPay withholding trap.
 
And using USPO money orders is Very easy.

I was leery at first, but it's not bad at all.
Everyone should be considering that, at least.......
 
p64imp said:
Exactly the type of headache I'm working to avoid lol

I have a great disrespect for PayPal and how they treat their customers. I do not want them to "own me" like that as today is a reminder of how much they treat you like trash if an issue happens.

I'll just have to own this loss and move on with the knowledge.

Hopefully this thread at least educated even one other person to avoid this issue. If so, the cost of the lesson learned is a bit more stomachable.

Been communicating with the buyer, and he's being super cool about things, so that's a plus.
Click to expand...
Providing your SSN to a financial institution so they can abide by their legally mandated reporting requirements doesn't mean they 'own' you.

It is an expensive lesson to learn, but now I guess you know for the future that you need to specify in your sales that PayPal is not an acceptable payment option.
 
stonesell said:
Your thread is definitely educational in helping others to avoid the hellish 24% PayPay withholding trap.
Click to expand...
Biggest take home in my situation is, there is literally no way for me to contest the money they send to PayPal. The Sup at PP told me "I have no documentation to provide you for you to declare these taxes with your 2023 filing. We send the money with your name, address, and email to the IRS, so unless you provide us a TIN, you will have no way to report it to them as taxable income with your filing."

She told me this when i asked for a document I could provide to my tax filer to request compensation to show I refunded the buyer in full for a credit back.
 
p64imp said:
only partially correct. Paypal does not gate the payments coming in. When I challenged this, they supervisor said "you agreed to automatically accept these payments when you entered your email and clicked "accept".

Laws be what they may, PayPal could at least add a prompt to say "You received a $5000 payment from Mr. XYZ, do you want to accept this?" Especially for accounts that don't have/want to supply a TIN, understanding that this will automatically go into 24% mode.
Click to expand...
Why would PayPal gate incoming payments? That's an extra step impacting millions of transactions.
 
p64imp said:
Biggest take home in my situation is, there is literally no way for me to contest the money they send to PayPal. The Sup at PP told me "I have no documentation to provide you for you to declare these taxes with your 2023 filing. We send the money with your name, address, and email to the IRS, so unless you provide us a TIN, you will have no way to report it to them as taxable income with your filing."

She told me this when i asked for a document I could provide to my tax filer to request compensation to show I refunded the buyer in full for a credit back.
Click to expand...
Print your transaction history at the end of the year. Everything should be on there. Then you explain it with the facts in consultation with your preparer if need be.

Consider the possibility that the person at PP doesn’t know or care to help—or may be telling the truth as it stands this moment.
 
PayPal, like any financial organization, needs the personal information so they can send their tax forms to the IRS. All banks do it.. PayPal is a bank. You can’t open an investment account, etc without sending in the info. Just send the info, unlock your funds, and deal with the taxes when tax season comes. There isn’t anything sketchy about this.
 
Crag the Brewer said:
And using USPO money orders is Very easy.

I was leery at first, but it's not bad at all.
Everyone should be considering that, at least.......
Click to expand...

I find USPS MO very annoying and not easy. Their operating gours and waiting in line are generally a deal breaker for buying anything requiring a USPS MO.

This is fine, since I shouldn't buy more stuff anyway.

OP, sucks that you're going through this. I can't help but feel like what you're telling us is onesided and biased, as is usually the case when we only have one side of the story, but it's still annoying. Given that Paypal is a financial institution, I'm a little surprised they have your bank account numbers and not your SSN. It sucks to find things like this the way you did instead of being able to work through it for mutual satisfaction for all sides.
 
p64imp said:
not possible? They already do this with friends and family payments...

View attachment 2305850
Click to expand...

Is that the PP app? I've never seen the "accept the money" button in my 15 or so years of using PP. It's been a business account for probably 10 of that, so there are likely things I don't experience that others do.
 
Maybe PayPal should begin offering a tax preparation service. Of course, then when you itemize your "knives", they'll ban you from further transactions after dunning you for the service provided.

You play by the rules established by the gov't and the financial institutions which are bound to follow them, in addition to their own set of rules.
 
p64imp said:
Biggest take home in my situation is, there is literally no way for me to contest the money they send to PayPal. The Sup at PP told me "I have no documentation to provide you for you to declare these taxes with your 2023 filing. We send the money with your name, address, and email to the IRS, so unless you provide us a TIN, you will have no way to report it to them as taxable income with your filing."

She told me this when i asked for a document I could provide to my tax filer to request compensation to show I refunded the buyer in full for a credit back.
Click to expand...
PP will supply you with a 1099k (or maybe another form since no SSN)noat the end of the year. This along with a copy of your refund(that you can print from the site) should be all you need to file correctly.
You are fighting a loosing battle over the SSN . Not only will every financial institution need it, but doctor, auto insurance hospitals dentists will all ask for it.
Putting a lock on your credit is not a bad idea
 
Last edited:
King of the Cheese said:
PayPal, like any financial organization, needs the personal information so they can send their tax forms to the IRS. All banks do it.. PayPal is a bank. You can’t open an investment account, etc without sending in the info. Just send the info, unlock your funds, and deal with the taxes when tax season comes. There isn’t anything sketchy about this.
Click to expand...
Exactly what I would do. Free up the money. I have been declaring long or short term capital gains and losses for many years without an issue.
 
Status
Not open for further replies.
Back
Top