Warning to escorts who accept credit cards and Paypal

[Diverdan]

I agree with you BVB... none of the guys that have ever done my taxes ever looked very good... and not just age... they never seemed to take care of themselves, IMHO. But, there is hope, I recently made a change to a young tax accountant... WOW.... it is so much fun to go visit him... and one of these days we are going to have dinner......

[+ Gar1eth]

If you know how to do it you'll be fine. That escort had 60K in income which means that if he also has within that 200 transactions to make up that 60K PayPal would have issued the govt and him a 1099K. There are certain rules to be aware of when accepting non cash payments, just be aware of them. I claim all my PayPal income anyway just to be safe and only use it as a last resort when a client can't get access to cash or to collect a small deposit.

 

I see another career in your future KJ. Escort Tax Advisor.

 

Been there, done that, got a few gray hairs because of it too. I have a finance degree with an accounting minor and did partnership tax for a couple of years, one year in a part time job / internship and another at a tax firm in Connecticut.

 

Did you get the t-shirt?

 

Gman

[+ Robster]

Did you get the t-shirt?

 

Gman

http://i3.cpcache.com/product/899743202/property_of_a_hot_accountant_tshirt.jpg?height=225&width=225

[+ Gar1eth]

I will have to apologize for being off subject for a second. But something just occurred to me. I beg the OP's pardon.

 

http://i3.cpcache.com/product/899743202/property_of_a_hot_accountant_tshirt.jpg?height=225&width=225

 

 

Robster,

 

I just realized whom your icon reminded me of. And it's especially appropriate for that memory to surface today. Happy Mother's Day to all of you out in Forum Land. And to all of you with Mothers who have passed- may their memory always be a blessing to those who loved them!!

 

 

 

Gman

[whipped guy]

One more 2 cents worth of input...

As noted above for some reason the IRS threshold for someone paying money to an individual is 600 dollars in a calander year. If someone is hired as an independent contractor and is paid $599.99 nothing need be reported to the IRS... You go over that amount and a 1099 - Misc needs to be filed.

 

So technically should we not be sending 1099 forms to the IRS when we go over 600 to any given individual... and at NYC Ptices that comprises a mere two hours of fun. Just a thought!

 

I would guess that many here support higher taxes... and we all do need to do our best to make sure that they are indeed fairly collected... right?!

 

Just my 2 cents... That leaves me with $599.98 to still play with and keep things on the up and up!

Quoting myself here... I find it strange... actually almost taken aback... that so many found the need to comment on this seriously...

 

Perhaps I should have used a different smiley face at the end... as in GEEEZ!!!!!

 

That's 6 cents total that I now have exprnded on this thread...

[+ Robster]

I will have to apologize for being off subject for a second. But something just occurred to me. I beg the OP's pardon.

 

Robster,

 

I just realized whom your icon reminded me of. And it's especially appropriate for that memory to surface today. Happy Mother's Day to all of you out in Forum Land. And to all of you with Mothers who have passed- may their memory always be a blessing to those who loved them!!

 

 

 

Gman

I'm flattered; he's a cutie. Thanks!

 

Rob

[gallahadesquire]

My dad was an IRS agent. He was also a volunteer deputy sheriff in our home county. He would go with the Sheriff to bust up stills out in the woods. After destroying the still and pouring all the alcohol out, he would then present the still operator with a Tax Notice for Taxes due on the Alcohol the sheriff just confiscated and destroyed.

 

Even though the maker had no Federal Alcohol License, even though he didn't have the alcohol to sell, he still owed the tax on the alcohol he made.

 

Al Capone, of Chicago Mob fame, was nailed on exactly that: Tax evastion. Murders, attempted murders, assaults, batteries, theft: Tax evasion.

[gallahadesquire]

Been there, done that, got a few gray hairs because of it too. I have a finance degree with an accounting minor and did partnership tax for a couple of years, one year in a part time job / internship and another at a tax firm in Connecticut.

 

My intellectual side, when it's working, would REALLY have a fun time talking with you.

[gallahadesquire]

Perhaps a boring aside: As an academic physician [anesthesiologist], I was paid by two Universities, one private, one public. In theory, there should have been a 1099-R from each insurance company, to cover the amount sent to the hospital, for each case / on a yearly basis.

 

Not that I think that this is useful, but: There's a big loophole. Since ALL receipts went to the hospital (and, if mis-delivered, we were required to sign them over TO the hospital) AND we were salaried, the IRS foregoed - forwent - ignored [forwent didn't hiccup the spell checker] the lack of 1099's. Saved everyone a major pain in the head. Of course, everybody involved was state government / 501©3.

 

Every once in awhile, the government does something intelligent.

[YooperMike]

Been there, done that, got a few gray hairs because of it too. I have a finance degree with an accounting minor and did partnership tax for a couple of years, one year in a part time job / internship and another at a tax firm in Connecticut.

 

If you're good at it an ever decide to get back into accounting, I'm really sure that I would come up with more than a few 'legitimate' reasons to compensate you well beyond what most accountants expect to earn. Btw, sorry my Phoenix plans and yours did not coincide. Thank you for responding. Someday, I hope to have the pleasure of meeting you.

[rvwnsd]

Am I missing something or is this just a matter of the IRS asking someone to account for income they have received?

 

Account for and pay taxes on income they received, yes.

[instudiocity]

Account for and pay taxes on income they received, yes.

After expenses...

[Despardo]

Wow! Either accepting or using credit cards for escort services leaves a huge trail for the IRS, the FBI or the police to follow. Not a good idea for many reasons. This is why God invented ATM machines.

[Kevin Slater]

Am I missing something or is this just a matter of the IRS asking someone to account for income they have received?

 

Account for and pay taxes on income they received, yes.

 

Just to be clear, my understanding is that the IRS doesn't care how one makes his money, beyond categorizing it correctly as earned versus unearned income, claiming appropriate deductions (or rather, not claiming disallowed deductions) and the like. Whether you make it selling widgets or your ass isn't really their concern, beyond the nuance that selling a physical product has different tax implications than selling a pure service.

 

Kevin Slater

[Scorpio]

Perhaps a boring aside: As an academic physician [anesthesiologist], I was paid by two Universities, one private, one public. In theory, there should have been a 1099-R from each insurance company, to cover the amount sent to the hospital, for each case / on a yearly basis.

 

Not that I think that this is useful, but: There's a big loophole. Since ALL receipts went to the hospital (and, if mis-delivered, we were required to sign them over TO the hospital) AND we were salaried, the IRS foregoed - forwent - ignored [forwent didn't hiccup the spell checker] the lack of 1099's. Saved everyone a major pain in the head. Of course, everybody involved was state government / 501©3.

 

Every once in awhile, the government does something intelligent.

 

Sorry but there is a lot of disinformation in this post.

 

First, a Form 1099-R would have never been issued in this instance. A Form 1099-R is used to report distributions from retirement funds, such as pensions, annuities, IRAs, profit sharing plans, etc.

 

Second, the appropriate form would have been Form 1099-MISC with amounts being reported in box 6. However, since the insurance company was making payments directly to a tax-exempt organization, the instructions specifically exempt these payments from being reported on a 1099-MISC. Had the insurance company paid the physician directly, then a 1099-MISC should have been issued. If the physician was then obligated to pay the money over to the university, this would have been a business deduction with net taxable income from the transaction being $0.

 

The various forms 1099, schedule K-1s, forms W-2 are designed to match payments from various payers to individual taxpayers as a check and balance. However, regardless of the source, a US citizen is required to report his or her income on his or her individual income tax return whether or not one of these reporting/information returns was received. This includes CASH that generally escapes these information returns.

[MiamiLooker]

Last night a dear, sweet and handsome escort I have seen ocassionally for a couple of years showed me correspondence that he received from IRS about ten days ago. The escort is well known and has many reviews on this site.

 

The escort accepted credit cards and Paypal. The documents he showed me from the IRS accuse him of not reporting more than 60,000 dollars paid to him by credit cards and Paypal during 2013. The IRS documents assess him with huge penalties and interest on the unreported income. The penalties and interest amount to almost 35,000 dollars.

 

The escort told me that the amounts reported by the credit card companies and Paypal are "probably correct" but he does not remember how much money he made in 2003 from cash payments for escorting. He said he didn't report any escort income, only his income from his day job.

 

Needless to say, he has problems, big time.

 

Escorts and their clients should read the below web link. Accepting credit cards gives escorts quick access to funds and convenience for clients. But, credit card companies and Paypal, are required to disclose payment amounts to the IRS.

 

The escort no longer accepts credit cards or Paypal.

 

http://www.aicpa.org/Publications/TaxAdviser/2015/april/Pages/Tax_Clinic_09.aspx?cm_em=dgcpaphd@gmail.com&cm_mmc=AICPA:CheetahMail-_-NewsUpdate-_-MAY15-_-NewsUpdate_A15MY40_FVS

Is there a possibility of jail time in addition to the monetary penalties?

[Scorpio]

Is there a possibility of jail time in addition to the monetary penalties?

 

Criminal penalties are possible in cases such as these, but I've never seen it happen in my practice.

 

http://www.irs.gov/uac/Related-Statutes-and-Penalties---General-Fraud

[maninsoma]

I'll confess I haven't read all of the responses to this thread, but my first reaction is why would someone try to underreport income where there is an obvious paper trail? If you want to try to skip paying taxes on a portion of your income and you're in a cash based business, by all means insist on being paid in cash.

[marylander1940]

I've always wondered about that... Hmmmmm! Well PayPal does give a big of anonymity to the parties involved...

 

However, surprise surprise... I guess that they are also a good "PayPal" with the IRS!

 

Interestng...

 

No it doesn't... cash is king.

 

I wouldn't like to go through a divorce from my wife or husband, and have her/his Lawyer subpoena CC, paypal, my emails and text messages. If you don't want to get screwed call the escort from your hotel number and limit the amount of xxx rated texting.

[whipped guy]

Well I would normally never ever consider using PayPal for escort services...

 

However, funny story... Once I paid the guy... and I handed him the Ben Franklins... It looked good to the both of us... HOWEVER! We were both not wearing our glasses and I shorted him a C Note. He was too embarrassed to tell me about it and it was only a day later when thanking him for the session I jokingly said, "Well, if you had such a good time then I should have charged you!" Long story that's when the mishap was revealed. By that time I had left town... If he had told me sooner I would have run right over to where he was staying as it was only a couple of blocks from my hotel!

 

I really felt badly about it even though he said not to worry about it. The guy did have a PayPal account and we squared away using that method. I felt better and was able to sleep soundly... I did write quite a glowing review for the guy... actually the second one that I had submitted in his behalf.... I cryptically alluded to the mishap so that only the two of us would know what it referenced. The guy got a kick out of it.

[jimboivyo]

Is there a possibility of jail time in addition to the monetary penalties?

 

the IRS is like the mob. they just want their cut

 

if the escort can pony up the cash to keep the govt off his back, he'll walk away from this without a scratch

[down_to_business]

Or you can simply report all your income properly to the IRS and not worry about what method of payment you accept.

 

Many reporting requirements about financial transactions were established by the Patriot Act.

[coriolis888]

the IRS is like the mob. they just want their cut

 

if the escort can pony up the cash to keep the govt off his back, he'll walk away from this without a scratch

 

 

 

Please take a look at this :

 

http://www.forbes.com/sites/robertwood/2015/04/10/10-notorious-tax-cheats-wesley-snipes-hired-tax-professionals-but-still-was-jailed/

[ZhenXBear]

Ya never know. But I'm on the 8 year plan doing online classes now working towards a nursing degree. Taking my time actually getting a chance to enjoy learning and not just memorizing for a test, then divorcing the knowledge a few days later.

 

Good to hear you're doing something you enjoy! Healthcare needs more people with this attitude.

 

With your existing finance background you'd likely be able to pursue the administrative side of Nursing should you ever have a desire to go that route, Killian.

[whipped guy]

Ya never know. But I'm on the 8 year plan doing online classes now working towards a nursing degree. Taking my time actually getting a chance to enjoy learning and not just memorizing for a test, then divorcing the knowledge a few days later.

Good to hear you're doing something you enjoy! Healthcare needs more people with this attitude.

 

With your existing finance background you'd likely be able to pursue the administrative side of Nursing should you ever have a desire to go that route, Killian.

Well I'm impressed as well... and that's a great additude to have too boot. More should have such a mindset.

 

Also, regarding the eight year plan, I might be in need of a personal nurse by that point in time... However, in the meantime I may just have to check you out to make sure that you are capable of providing the required services.

 

Sorry, for continuing the detour from the main topic... but who would blame me...