0

I am serving as a conduit for a friend by receiving money from PayPal and sending it to her through CashApp (her PayPal account is currently limited).

The transactions I am getting in PayPal are marked as "for friends and family", but the amount is likely to go over $600.

I will then transfer the money to my bank, and then transfer the money to her CashApp, where she presumably will pay taxes along with the rest of proceeds she gets from all of the sales.

My question is, am I also in danger of getting in trouble with the IRS on the following grounds:

  1. PayPal may see my amounts being a little high (over $600), but are all marked as "personal", and from people around the world - it's unlikely I'm splitting a check with someone from Israel, and hence flag this and send me an 1099-k or report this to the IRS.

  2. My bank, seeing that I get random inflow amounts through out the year, believe that I have a "side business" so that it report to the IRS.

  3. The IRS having an expanded scope, is able to probe into PayPal or my bank, requesting information, and seeing the transactions, decide to audit me asking me to provide details on the transactions (which I cannot, since they're my friend's sales, and by that time, my friend is likely to be back to her home country and might be difficult to get a hold of).

Lastly, would I be safe if I stop before receiving $600 on my PayPal account?

Thanks!

5
  • Can someone explain the downvotes? I am trying to ask a legitimate question here so I can be a good law-abiding citizen.
    – user101998
    Apr 30 at 15:22
  • Probably because this sounds like a typical scam.
    – glibdud
    Apr 30 at 15:23
  • @glibdud You mean what my friend is doing, or what I'm doing?
    – user101998
    Apr 30 at 15:24
  • What your friend is doing. It looks like you're either being scammed or used to launder money.
    – glibdud
    Apr 30 at 15:24
  • Good point. This is what I was afraid of (being flagged as launder). Her PayPal became limited from people reporting she was selling products of sexual nature online, and presumably she did. I was just trying to help, in the post-pandemic world where many are struggling, but of course, it's not worth it if I have to put myself at risk. So I came here to see what the gurus have to say.
    – user101998
    Apr 30 at 15:31

1 Answer 1

0

Frame challenge: The IRS is the least of your worries

There are at least a couple of possibilities here that work out very badly for you.

  1. You're straight up being scammed. I think this is the most likely. I'm not intimately familiar with the policies of either PayPal or CashApp, but I suspect your "friend"'s transfers to you are somehow reversible, while the CashApp transfers back to them are not. Eventually the transfers in will be wiped out (maybe by the scammer themself, or because they were using a stolen account and the actual owner caught on and reported it), leaving you on the hook for however much money you already sent them. This is an extremely common scam, though the specific details can vary. Browse the tag here for examples.

  2. You're being used to launder money. The money being transferred to you may have been acquired via illegal means (drug sales, extortion), and is being passed through your account both to make it harder to trace and to give authorities following the money someone to investigate that isn't them. You may not actually get in trouble if the authorities are convinced you weren't voluntarily in on it, but there's always a risk and it may draw unwanted attention for a while.

Bottom line, it's best not to get involved in the financial affairs of anyone you meet on the Internet.

5
  • 1
    Thank you for the thoughtful answer. The PayPal payments I am receiving are from all over the world, and are sent as "friend and family", so I don't quite believe those payments are reversible. I do recognize that if the money sent through PayPal are for merchandise, then I'm definitely on the hook if the buyers initiate a chargeback. As for the second point, the money she makes are actually from selling used clothing for people who are into those things - hence of sexual nature and against PayPal's policy. But yes, if she's doing other illegal activities then I'll be in trouble.
    – user101998
    Apr 30 at 15:59
  • @user101998 your friend needs to open business accounts with PayPal and CashApp because you and she are setting yourselves up for bigger IRS hassles than not paying some fees.
    – RonJohn
    Apr 30 at 20:20
  • @user101998 Have you verified that's the actual source of the money, or do you only have her word for it?
    – glibdud
    Apr 30 at 22:56
  • @RonJohn Yes. This is a short-term solution and I will not be doing this for the long run out of concerns of getting into trouble with the authorities.
    – user101998
    May 1 at 16:05
  • @glibdud Yes I think the source of money is pretty transparent; amounts are pretty small, and payers are from all over the world, and I also was aware of the site that she sells on. So I think it's pretty safe to say that the source isn't too big of a concern.
    – user101998
    May 1 at 16:07

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.