Selling bitcoin for paypal. Do I need a license to do this/ need tax advice.

Lanatsa

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Quote from: Harlot on June 16, 2020, 11:07:26 AM

If you are in a AML-strict country I think it's best that you have proper documentation with the transactions you will make with him. You may even ask his valid IDs as a way of proof that you have indeed a customer and this will be easier for the authorities if they somehow question him about the transaction he is making with you. Keeping all the invoices, tx ids, as well as connecting the Paypal payments and the tx ids should also be documented so that you are prepared when someone will question you. This will also make it easier for you on keeping track the profit you will be making.

Wise thing to be done and it would be better to keep those important info's but it can already be automatically seen since paypal platform can give out such history.

You should also kept TX transaction on btc transfer made and plus with the conversations with the said person.Its better to be prepared than have nothing at all and just

in case if there are verifications or clarifications on where those funds came from then you do have something to tell and can show off.

Harlot

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If you are in a AML-strict country I think it's best that you have proper documentation with the transactions you will make with him. You may even ask his valid IDs as a way of proof that you have indeed a customer and this will be easier for the authorities if they somehow question him about the transaction he is making with you. Keeping all the invoices, tx ids, as well as connecting the Paypal payments and the tx ids should also be documented so that you are prepared when someone will question you. This will also make it easier for you on keeping track the profit you will be making.

Maus0728

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Quote from: carlfebz2 on June 14, 2020, 06:12:07 PM

You wont have any problems with taxation but the real problem lies either on the user you are transacting and on that paypal account you do have.

I don't think so. OP is dealing with a large amount of money that is traded on a day to day basis. Receiving $ 5,000 each day is not a joke and could be subjected to an illegal transfer of money in the eyes of law especially if you are US based citizen. I also have the same sentiment with regards to OP but I didn't notice that the amount of money he is transferring can be against the Federal Law.

Quote from: bitcoinpaypalguy222 on June 14, 2020, 09:35:04 PM

I am asking only for what to do with taxes and do I need licenses and things like that

I am not a US based citizen but I have done my research to help and give you a bit of information what are the steps on what are you going to do with your taxes based on the information given by @gentlemand.

The links below can be tiresome to follow but I would rather deal with those papers and requirements to avoid such problematic events in the long run.

[1] The Quick Guide To Money Transmitter Licenses

seoincorporation

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Quote from: bitcoinpaypalguy222 on June 09, 2020, 11:05:05 PM

My question is, I am selling bitcoin to a trusted individual, he sends me PayPal for bitcoin. He will be sending me $5,000 in PayPal per day and I will be sending him $4,750 in bitcoin per day keeping $250. Do I need a license to conduct this or any other tax advice I should know about? Thanks.

It's possible and legal to do it, lot of people in this forum offer that kind of trade. But the error will be if the user who made the paypal payment specifí it was used to buy bitcoin, it can be a payment under marketing services or something like that. That way PayPal will be happy with the transaction and you will avoid any kind of problem.

bitcoinpaypalguy222

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If there were no issues with my paypal account and the money I receive it completely clean and the person I am working with is trusted and legit what would be my issues regarding taxes? All my business is is I get sent $5,000 in paypal, send $4750 in Bitcoin and keep the $250. I am asking only for what to do with taxes and do I need licenses and things like that not for advice on paypal/is the person im working with trusted or is the money I receive clean.

MCobian

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Take it easy there are no regulations regarding taxes in bitcoin transactions, what else do you do personal trading so you can be free of taxes.
I often do personal trading, and safe until now. I have never had a tax problem, but my advice is to avoid using it paypal. There have been many
cases of paypal accounts locked suddenly without apparent reason. I recommend using Paxum or perfect money.

kawetsriyanto

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If you do with your trusted friend, why would you need a tax or license? is it only between you and your friend, isn't it? or, previously, is there any certain regulation in your country that says that you must pay for taxes or even have a certain license? or it is only the approval between you and your friend? I still do not know enough about the case of you and your friend in your country. But, it must be any certain agreement to ensure that your transaction will be okay someday.

carlfebz2

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Quote from: bitcoinpaypalguy222 on June 09, 2020, 11:05:05 PM

My question is, I am selling bitcoin to a trusted individual, he sends me PayPal for bitcoin. He will be sending me $5,000 in PayPal per day and I will be sending him $4,750 in bitcoin per day keeping $250. Do I need a license to conduct this or any other tax advice I should know about? Thanks.

You wont have any problems with taxation but the real problem lies either on the user you are transacting and on that paypal account you do have.

Be sure that those transactions wont really flag in Paypal because anytime it can really be locked if the platform would see it suspicious.

Those are the only things that you should be concerned of not on the taxation thing.

gentlemand

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Quote from: bitcoinpaypalguy222 on June 14, 2020, 05:31:49 PM

Wow, if I were to not get a money transmitter license and just receive the money via paypal buy the bitcoin send it to him keep the $250 and if the money is not linked to some form of criminality from an investigation what would happen?

You'd be breaking the law if you live in a place where that law applies. The act of handling money without following the rules is a crime in itself. Obviously you have more problems if that money is crime related too but even if it's completely clean you're still flouting rules they take seriously.

If it was a few bucks here and there no one's going to care but you're talking about pretty large volumes and at some point that might alert someone. No one's getting executed or anything but it's going to be problematic.

There's real money involved which means real law applies just as much as anywhere else. It's no longer an internet obscurity. People need to figure that out before they embark on things that could end up getting very messy.

If this was 2011 then it would be a different matter. It isn't. Enough places have clarified the legal position now. If you're in a place where it is clarified then it's clear enough what needs to be done.

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So, it has been confirmed that you really sell the BTC to "a trusted individual"? If he is real, it will depend on some situation regarding the license or even tax.
1. It will depend on how issue or regulation in your country
Is it your country selling or buying BTC legal? Is there any certain regulation that everyone selling or buying BTC must pay for the tax and make some license? if it is yes, you should because it will relate to the risk you two have. but if it is not, you may not need to pay for taxes or even need a license.

2. Ensure that you two trust each other.
It is very important if you have that certain agreement, you may need to ensure what kind of agreement do you two have. Do you have an agreement to sign on a paper and make it as proof of that transaction? including the way and also rules fo you two transferring?

3. What's about the $250? Will it be kept for you or there will be any further agreement of it? It should be between you two, not to answer here.

basically, if you are going to have a certain individual transactions, you must really do it with the one that you really trust. You two may need to have an agreement signed in the paper so that if someday there is a problem, you two have proved to make it clear.

bitcoinpaypalguy222

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Quote from: gentlemand on June 14, 2020, 01:05:19 PM

Quote from: Sanugarid on June 14, 2020, 12:41:59 PM

I'm not from the U.S. but is this necessary? I mean if the OP is from U.S., does he needs to register as a money transmitter? coz basically what he is trying to do is do a personal trade and as far as I know there are still no law covering this crypto-fiat stuff in the U.S. or am I missing something?

As what I understand from the OP, he's like supplying an amount of bitcoin to a certain guy on a daily basis, so I think it is unnecessary to keep records.

What are the dangers of not keeping the records to a localbitcoin traders?

Do you think the law is going to care if these people know each other? Look at the amounts OP is talking about - $150,000 a month. I'm sure plenty of money launderers go on holiday with the people they serve too. I don't think a judge is going to send them off with 'sorry for wasting your time' because of that.

The dangers of not keeping records are being convicted of pissing all over the law. If you're converting and sending money you are a money transmitter in most of the US. You have to register as such and follow all of the requirements which will include gathering info regarding the person you're receiving and sending money to to combat money laundering.

They might never be investigated unless the money is linked to some form of criminality from an investigation but you're playing with fire regardless and claiming that you didn't know anything about it is commonly accepted as a failed defence.

https://www.coindesk.com/localbitcoins-trader-pleads-guilty-money-transmitter-charge

https://www.coindesk.com/localbitcoins-users-criminal-charges-florida

One of the members here felt the full force of this too - http://www.jmwagner.com

Wow, if I were to not get a money transmitter license and just receive the money via paypal buy the bitcoin send it to him keep the $250 and if the money is not linked to some form of criminality from an investigation what would happen?

gentlemand

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Quote from: Sanugarid on June 14, 2020, 12:41:59 PM

I'm not from the U.S. but is this necessary? I mean if the OP is from U.S., does he needs to register as a money transmitter? coz basically what he is trying to do is do a personal trade and as far as I know there are still no law covering this crypto-fiat stuff in the U.S. or am I missing something?

As what I understand from the OP, he's like supplying an amount of bitcoin to a certain guy on a daily basis, so I think it is unnecessary to keep records.

What are the dangers of not keeping the records to a localbitcoin traders?

Do you think the law is going to care if these people know each other? Look at the amounts OP is talking about - $150,000 a month. I'm sure plenty of money launderers go on holiday with the people they serve too. I don't think a judge is going to send them off with 'sorry for wasting your time' because of that.

The dangers of not keeping records are being convicted of pissing all over the law. If you're converting and sending money you are a money transmitter in most of the US. You have to register as such and follow all of the requirements which will include gathering info regarding the person you're receiving and sending money to to combat money laundering.

They might never be investigated unless the money is linked to some form of criminality from an investigation but you're playing with fire regardless and claiming that you didn't know anything about it is commonly accepted as a failed defence.

https://www.coindesk.com/localbitcoins-trader-pleads-guilty-money-transmitter-charge

https://www.coindesk.com/localbitcoins-users-criminal-charges-florida

One of the members here felt the full force of this too - http://www.jmwagner.com

Sanugarid

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Quote from: gentlemand on June 14, 2020, 11:57:42 AM

Quote from: bitcoinpaypalguy222 on June 12, 2020, 09:11:28 PM

If my paypal didn't get locked and this all worked, would I get in trouble for any money laundering issues or can I just tax my $250 profit and be done with it on the tax side of tihngs.

If you're in the US then you'll be expected to register as a money transmitter and you'll likely need to do your own KYC and anti money laundering stuff and keep records of everyone you do business with.

I'm not from the U.S. but is this necessary? I mean if the OP is from U.S., does he needs to register as a money transmitter? coz basically what he is trying to do is do a personal trade and as far as I know there are still no law covering this crypto-fiat stuff in the U.S. or am I missing something?

Quote from: gentlemand on June 14, 2020, 11:57:42 AM

Tax'll be fine. It's just a gig with some profit. It's the other stuff that might wind up being a lot of extra work. Not keeping records is what has landed localbitcoins traders in trouble.

As what I understand from the OP, he's like supplying an amount of bitcoin to a certain guy on a daily basis, so I think it is unnecessary to keep records.

What are the dangers of not keeping the records to a localbitcoin traders?

gentlemand

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Quote from: bitcoinpaypalguy222 on June 12, 2020, 09:11:28 PM

If my paypal didn't get locked and this all worked, would I get in trouble for any money laundering issues or can I just tax my $250 profit and be done with it on the tax side of tihngs.

If you're in the US then you'll be expected to register as a money transmitter and you'll likely need to do your own KYC and anti money laundering stuff and keep records of everyone you do business with.

Tax'll be fine. It's just a gig with some profit. It's the other stuff that might wind up being a lot of extra work. Not keeping records is what has landed localbitcoins traders in trouble.

bitcoinpaypalguy222

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If my paypal didn't get locked and this all worked, would I get in trouble for any money laundering issues or can I just tax my $250 profit and be done with it on the tax side of tihngs.

gentlemand

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Quote from: Maus0728 on June 11, 2020, 05:50:15 AM

Thanks for the advice @gentlemand. I didn't immediately recognized that paypal is somehow controlled by law and has the power to suspend their services to people and report them to IRS. What else he can do?

I apologize for being ignorant.

No need to apologise but it's a bit alarming telling people to run free when that's a million miles from the truth. Paypal is just as subject to law as anywhere or anything else. Just because it's 'on the internet' does not make it magically exempt. The moment you start playing with money you also start potentially playing with fire especially in the US.

OP is talking about converting and sending $150,000 per month. Even if it's a favour and there's no profit involved that may well attract some unpleasant attention.

davis196

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Quote from: bitcoinpaypalguy222 on June 11, 2020, 01:40:57 AM

Do you think I would need a business paypal account to conduct this or would a personal be ok? Again, the person im dealing with is completely trusted, the problem im facing is taxes and would paypal shut me down.

Having a Business account is way better for receiving large sums.However,the risk of Paypal locking your account remains.You will have to lie about the origin of the incoming transaction.Never mention to Paypal that you are selling cryptocurrencies for fiat money.They will most likely ban your account.Claim that this payment is for web design services,or some other expensive digital service and you'll be fine.
If you can verify your Paypal account with real info about yourself,everything is going to be alright.
I used to sell BTC for Paypal funds 3 years ado on Localbitcoins,but I stopped doing this,because the Paypal fees were getting worse and Paypal limited my account twice.I managed to lift the limitations,but I thought that it's not worth it to use Paypal for such activities.

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Quote from: bitcoinpaypalguy222 on June 11, 2020, 01:40:57 AM

Do you think I would need a business paypal account to conduct this or would a personal be ok? Again, the person im dealing with is completely trusted, the problem im facing is taxes and would paypal shut me down.

You're probably more unlikely to raise red flags on their side if you actually use a PayPal business account that is actually a real business, with verification documents and stuff. Creating a new business account just for the sake of accepting the PayPal funds though? Won't be that much different than a personal account to be honest. If anything, probably more shady on their side.

Maus0728

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Quote from: gentlemand on June 11, 2020, 03:54:15 AM

Quote from: Maus0728 on June 09, 2020, 11:44:42 PM

~snip~

If people ran their lives on the 'advice' given out on here they'd spend the rest of it breaking rocks under the hot sun in chains. Have you failed to notice that everyone now has to declare to the IRS whether or not they have crypto dealings whether it's taxable or not? and it most certainly is taxable if enough profit is involved. Even if there's no profit you have to tell them you've touched it.

I would give a Paypal account with those volumes 24-48 hours before it's frozen and questions are asked. And if you're in the US you might well fall under the definition of a money transmitter. You're providing an exchange service in the eyes of the law.

It may well be fine if you stay under the radar but ignorance is no excuse.

Thanks for the advice @gentlemand. I didn't immediately recognized that paypal is somehow controlled by law and has the power to suspend their services to people and report them to IRS. What else he can do?

Moreover, our country also declared tax to online businesses amidst pandemic. This may be a good measure to decrease fraudulent activities but it will never be a good idea to impose to smaller online merchants.
[1] https://www.gmanetwork.com/news/money/content/742065/bir-requires-online-sellers-to-register-business-declare-past-transactions-for-tax-purposes/story/

I apologize for being ignorant.

gentlemand

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Quote from: Maus0728 on June 09, 2020, 11:44:42 PM

The profit is all yours. You do not have to worry about paying taxes since the Internal Revenue Service (IRS) is still not giving an official statement about taxing or regulating bitcoin in general. You only need to worry about is the transaction fees you will be utilizing upon sending your bitcoin from his/her bitcoin wallet.

Quote from: Reatim on June 10, 2020, 01:28:21 AM

Don't you worry about taxes because Government has no power to impose that in online transaction such as Paypal to Bitcoin,what concerns me like what the above poster is the Locking of your account in Paypal though this will valid if you use for transacting in illegal or something related that Paypal will detect.

If people ran their lives on the 'advice' given out on here they'd spend the rest of it breaking rocks under the hot sun in chains. Have you failed to notice that everyone now has to declare to the IRS whether or not they have crypto dealings whether it's taxable or not? and it most certainly is taxable if enough profit is involved. Even if there's no profit you have to tell them you've touched it.

I would give a Paypal account with those volumes 24-48 hours before it's frozen and questions are asked. And if you're in the US you might well fall under the definition of a money transmitter. You're providing an exchange service in the eyes of the law.

It may well be fine if you stay under the radar but ignorance is no excuse.

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Quote from: bitcoinpaypalguy222 on June 11, 2020, 01:40:57 AM

Do you think I would need a business paypal account to conduct this or would a personal be ok? Again, the person im dealing with is completely trusted, the problem im facing is taxes and would paypal shut me down.

Paypal should be plenty enough to use tbh. The issue of paypal shutting you down isn't necessarily avoided if you pick a Business account or a personal one. The issue is still retained whether you make a personal or business, hence do take care of that. Best possible solution would most probably be getting your money out of paypal immediately after you receive it. The Tax issue has already been addressed, and basically paypal shutting you down could not be avoided BUT you can avoid getting your money locked inside by transferring it immediately. Just coordinate with the other guy if your paypal account got locked so he knows.

bitcoinpaypalguy222

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Do you think I would need a business paypal account to conduct this or would a personal be ok? Again, the person im dealing with is completely trusted, the problem im facing is taxes and would paypal shut me down.

Charles-Tim

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I do not have to say that bitcoin and other cryptocurrencies has nothing to do with the governments again because it has been said above, and so, in this case, bitcoin has nothing to do with any license. So because of this, there are a lot of scammers while using bitcoin to do this kind of trade, be careful not to be scammed.

Reatim

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Quote from: bitcoinpaypalguy222 on June 09, 2020, 11:05:05 PM

My question is, I am selling bitcoin to a trusted individual, he sends me PayPal for bitcoin. He will be sending me $5,000 in PayPal per day and I will be sending him $4,750 in bitcoin per day keeping $250. Do I need a license to conduct this or any other tax advice I should know about? Thanks.

Don't you worry about taxes because Government has no power to impose that in online transaction such as Paypal to Bitcoin,what concerns me like what the above poster is the Locking of your account in Paypal though this will valid if you use for transacting in illegal or something related that Paypal will detect.

For me what is the most important thing here?is that you need to consider using "ESCROW" though there might be a fee yet you can be sure of the safety transaction though you have already mentioned that your partner is a trusted person yet assurance is what you need here.

mk4

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Honestly I'd be more worried about PayPal potentially locking up your account. Based on my experience being on the eCommerce(and internet marketing in general) industry, PayPal is very notorious of randomly locking up people's accounts without giving a specific reason, potentially locking you out of your money for months end. And I'm talking about online stores that sells physical goods, what more digital goods? Significantly more prone to locks in my opinion.

Maus0728

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Quote from: bitcoinpaypalguy222 on June 09, 2020, 11:28:38 PM

In this transaction there is no fraud completely trusted individual. Since I am sending $4750 in BTC and receiving $5000 in paypal I would only need to pay taxes on the $250 prrofit I receive per day, correct?

The profit is all yours. You do not have to worry about paying taxes since the Internal Revenue Service (IRS) is still not giving an official statement about taxing or regulating bitcoin in general. You only need to worry about is the transaction fees you will be utilizing upon sending your bitcoin from his/her bitcoin wallet.

bitcoinpaypalguy222

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Quote from: Maus0728 on June 09, 2020, 11:23:39 PM

You do not need to worry about tax issues or any government related terms and condition other than transaction fees. However there are some countries that eyes bitcoin for having such taxes but still no government accomplished to regulate bitcoin as of now. It is still in gray zone.

Moreover, if you are selling bitcoin using localbitcoins then you are going to undergo KYC in order to use their services. In your case, the only thing you need to worry about is that the person you are transacting with is not a fraud.

In this transaction there is no fraud completely trusted individual. Since I am sending $4750 in BTC and receiving $5000 in paypal I would only need to pay taxes on the $250 prrofit I receive per day, correct?

Maus0728

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You do not need to worry about tax issues or any government related terms and condition other than transaction fees. However there are some countries that eyes bitcoin for having such taxes but still no government accomplished to regulate bitcoin as of now. It is still in gray zone.

Moreover, if you are selling bitcoin using localbitcoins then you are going to undergo KYC in order to use their services. In your case, the only thing you need to worry about is that the person you are transacting with is not a fraud.

bitcoinpaypalguy222

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My question is, I am selling bitcoin to a trusted individual, he sends me PayPal for bitcoin. He will be sending me $5,000 in PayPal per day and I will be sending him $4,750 in bitcoin per day keeping $250. Do I need a license to conduct this or any other tax advice I should know about? Thanks.

Topic: Selling bitcoin for paypal. Do I need a license to do this/ need tax advice. (Read 693 times)