Update For Card Sellers Accepting PayPal: IRS In The Mix
storm888
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PayPal Holds eBay Sellers' Money, May Be IRS Reporting Glitch
By Ina Steiner
AuctionBytes.com
November 03, 2008
At some point during the week of October 19, PayPal's system experienced a glitch involving eCheck payments made to eBay sellers. PayPal has been holding the payments captive ever since - and the glitch appears to be ongoing. Sellers are concerned about not being able to access their money, and are also worried whether buyers would be able to cancel orders for items already shipped. If they don't ship items because they have not received funds, sellers are concerned buyers will ding their reputations - especially since eBay has failed to publicly report the problem.
Sellers who experienced the problem say PayPal initially sent a "claim this payment" email, which PayPal has called an error in a forum post on the eBay discussion boards (11 pages as of Monday morning). PayPal spokesperson Michael Oldenburg told AuctionBytes on Wednesday it was a "known issue" and that he would have more information about it on Thursday. PayPal has yet to respond to follow-up inquiries, and was still sending erroneous "claim this payment" emails as late as October 30, 2008, about a week after the problem first surfaced.
The letter asks recipients to complete a special form, informing them they are one of PayPal's high-volume customers. "We ask PayPal users who receive more than $10,000.00 USD per month to complete our Supplemental Merchant Information form." It directs recipients to https://www.paypal.com/us/MERCHANT.
The letter may be related to new IRS reporting requirements that was part of legislation passed into law in July. In August, PayPal had told merchants it would be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who receive more than $20,000 in payment volume in a single year and receive more than 200 payments in a single year due to the Housing and Economic Recovery Act of 2008. However, many recipients of the PayPal letter say they do not fall under the requirements outlined in the letter.
Neither eBay nor PayPal posted any formal announcements about the glitch or when sellers can expect to receive their money, except for eBay Australia on October 30, which advised sellers with problems to call PayPal customer service. The communication problem is compounded since eBay recently fired all of its discussion-board moderators, called "Pinks," in the recent layoffs that affected 10 percent of its workforce.
Sellers report that even after payments show up as "cleared," the funds do not show up in their account. Instead, PayPal displays them as "unclaimed," and there is no way for the eBay sellers to claim the payments. eBay does not allow sellers to ban PayPal eCheck payments, and many buyers often don't realize when they are using eChecks to pay for goods.
eBay sellers find themselves in a bind, since they are now required to accept PayPal if they do not have their own merchant credit card account, which many do not. Since PayPal is not a bank, it appears to be unregulated, and users have no recourse when the service holds its funds without explanation.
One reader wrote a letter explaining the conundrum she faces as an eBay seller: "PayPal has a huge glitch...won't release our money. They HAVE NOT posted an announcement about this to help up explain to our buyers. IF we ship without payments cleared or claimed...the buyer can cancel payment and were without item and money. We get graded on our shipping time by buyers which reflects our discounts and search standings in ebay and they won't release the money or help explain it. BUYERs will think the SELLERS are BAD! It's not the sellers!!"
Another seller wrote describing the problem and ending the letter with, "My main issue isn't the fact that this annoying glitch is affecting my account...as much as the fact that EBAY isn't even remotely acknowledging there is a problem to the public. And if I were a new buyer that saw my e-check had cleared and the seller wasn't sending out my item yet...I would think it was the seller. And as far as I know the sender (buyer) is not receiving any notification from Paypal either."
In another communications-related problem unrelated to the eCheck glitch, PayPal sent an email to sellers on Friday correcting a previous email about its Seller Protection Policy. It stated, Unfortunately, this email incorrectly states that it's now easier than ever to be covered against items-significantly-not-as-described and items-not-received claims, chargebacks, and reversals. To clarify, the email should have said it's now easier than ever to be covered against unauthorized payments and items-not-received claims, chargebacks, and reversals. Our improved Seller Protection does not extend coverage to items-significantly-not-as-described claims, chargebacks, and reversals.
And in the glitch department, eBay has also been experiencing a problem with search affecting some users.
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....."Glitches" - yeah right!!!
I was one of the 'pinks' recently fired. I think it's about time that the public know what a sham paypal and ebay have become. Except for very early on, the first few months of it's operation, paypal never had/have any glitches. This is all to keep the buyers/sellers' money and gain revenue from it. Of course, they do not pay interest to the buyers and sellers. As for the reporting to the IRS, that's also baloney: IRS reporting is to start for the calendar year 2011. These revenues now reported couldn't be included on any tax returns/reports. That is all 'blather' - a lame excuse to cover up for their phoney 'glitches'.
As stated, paypal is not a bank, not regulated by banking laws, and so far, not accountable for the oney that they basically steal from sellers and buyers. They have to be subjected and regulated by US banking laws. They hold your money...it's as if you gave your money to a stranger on the street and said 'hold this for me' and then you hoped that you would get it back. That's a very simple equation, but also very very similar to what you run into with paypal and ebay. Afetr the elections are over and done with, and hopefully the new administration is friendlier to consumers (remember, Meg Whitman is a strong supporter of McCain - and vice versa.....an excellent reason, alone, NOT to vote for McCain...I'm saying this as a recently ex-republican....I can't even capitalize the name!). But to get back on track, paypal must be regulated and held accountable. Hopefully, the new politicians elected can remedy this once in office. You see how papypal operated differently in Australia with these fake 'glitches'. They fear the legal backlash that they have already unleashed by their duplicity in Aussie-land and cannot, there, get away with the lies that they spew out here in the States!" ....
PoppaJ
Seems like a good case for a "class action suit".
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Agree, it's interesting.
But, let me speculate based on my experience.
"I know a lot of pinks, some pinks are friends of mine, and THAT
entry was not written by a 'fired pink.'"
TONS of sellers are VERY angry. They post inflamatory messages
at every opportunity. NOT all such posts are made in good faith,
even though some of the thoughts expressed are "correct."
.........
Even glassdoor.com - which has been discussed here before - has
been infiltrated by "posers" pretending to be "fired employees."
Folks who well know the kind of language used by sellers vs. that
used by actual former-pinks can usually tell the real from the fake.
this is the same link i got the other day everybody said was a spoof
i never did see a supplemental merchant info form on there anywhere though,it just took me to some kind of stupid dead end?
goofy email from paypal thread post 10/28
it dont do anything, i dont get it? i got my $ out today just fine
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Yup.
I posted a follow up of Steiner's column the next day, when PP
told her that the "unclaimed money notice" was a "glitch."
...................
ONE good/interesting thing about the link page, is that folks who
are able to complete the linked form will henceforth receive 1/2%
knocked off the standard PP rate. It can take you down from 3% to 2.5%,
or from 2.5% down to 2%, depending on the type of account you
have and whether or not you have a "virtual terminal."
Once that form is completed, PP should not need to ask any further
"tax questions." For folks who already have MM accounts there, PP
already has all the info they will need for the new tax scheme. Also,
folks who used their SS# as part of the "verification process" will
not be asked for more tax info.
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The oral explanation I got is that BOTH............ 200 transactions AND $20K must occur.
I have seen it written that EITHER event triggers the report, but the woman handling
my MM/escrow account said "No."
The legislation is NOT about claiming money to be taxed. It is about requiring PP to
file a report of transactions with the tax authorities.
Any tax due would be due whether or not PP filed such a report.
<< <i>I'm a bit confused on this. If you dont take in more than $20,000 or 200 payments a year, you dont have to claim money coming in through paypal as income to be taxed? >>
Seems like the main issue here is federal income taxes on your profits from your sales, not just the good old state sales tax on the transaction. The feds regard any money going into your pocket as potentially taxable income. If you had a tag sale in your front yard or if you sold your junk on eBay, it would be money going into your pocket. The issue is whether there is any profit. If you are just unloading your basement and attic, there likely isn't any taxable profit - you are selling for far less than you paid for the stuff, unless you have a few old Barbie Dolls or other valuable antiques. Then, in a tax audit you would have to declare the profit as income. But that doesn't happen very often.
What the IRS is looking at here is that eBay is more than just a world-wide tag sale. Many of the sellers are merchants and the eBay page is just an electronic door to their sales floor. Others are just regular folk who collect stuff where ever they find it and then sell it on eBay. Each item may be small change, but it adds up. The regular businesses are not the focus of the new IRS interest, as they are already registered as businesses and (presumably) paying their proper corporate income taxes. Its all the others who are regularly selling on eBay that have all the attributes of a business, except a business license and payment of income taxes.
PoppaJ
you think the 700 Billion$$ bail out package grows on trees?> it comes from taxes......