I can report success in my case. I contacted PayPal repeatedly first by phone, then using the chat option on the website. I was told time and again that a “senior agent” would return my call in 24 hours, or that I would receive an email within a week, or that I would receive a revised 1099K by mail in three weeks, or whatever, whatever. None of that ever happened – until it did. Unexpectedly I received a revised 1099K from PayPal showing zero income for 2020 and therefore, by implication, no tax liability. I am guarding it with my life. I never received an explanation or an apology and for all I know that same fraudster is still out there to cause me or others further problems. I will be interested whether I receive another fraudulent 1099K in a few weeks. I have kept my PayPal account active to have access to PayPal’s customer service, such as it is, and to be able to respond to Community inquiries, but I will never again use PayPal for any transactions.
After a few attempts, I stopped trying to communicate with PayPal by telephone. It took forever to get through, the accents of the persons with whom I spoke were sometime difficult to understand, and of course I had no record of who said what to whom, although I summarized the calls in writing as soon as each was over. Instead I relied on the chat feature on the website. Since chat dialog is deleted after 90 days, I copied and pasted and saved my discussions with PayPal representatives as Word documents, and made and saved screen shots. Each time I contacted PayPal I would have to go back through my entire story again with whichever PayPal representative responded to me, even though I presume the dialog I had with earlier representative was available. (I received a case number in my first telephone contact so the representatives had something to go on.) The representatives’ names were clearly not English names so who knows from where they were contacting me, but I will say their written English was impeccable and I didn’t have to contend with accents.
Before receiving the revised 1099K, I had to file my 2020 taxes. I explained my situation to my long-time tax preparer. His immediate advice was to ignore the fraudulent 1099K and not report the income found on the form. What happens, I asked, when the IRS come knocking to say I had failed to report income and now owed back taxes, penalties and interest? (In my case, the income reported would have resulted in an extra tax liability of about $900.) Tell the IRS exactly what you just told me, my preparer said. So I filed my taxes without any reference to the bogus income reported on the 1099K and eventually I received my expected refund, no question asked, at least to date. But now I have the revised 1099K so I have the proof I need.
I hasten to say that I am not offering any tax advice, for which I have no qualifications, but only to report my experience. In fact I am dubious that my tax preparer’s advice would have won any argument with the IRS. I had no documentation or proof that I did not earn the income reported by PayPal (without which one cannot prove a negative in any case), but the IRS had a document from PayPal, the bogus 1099K, that clearly showed income and therefore a tax liability. All I had was my absolute certainty that I had earned no income via PayPal. But had push come to shove, I doubt my arguments would have won.
My advice is to use the chat feature rather than communicating by phone, state your case repeatedly, forcefully, clearly, and succinctly, demand a corrected 1099K, and try not to lose your cool (easier said than done for certain). Retain a record of any contacts: date, time, name of PayPal representative, topics discussed, promised follow-up by PayPal, etc. Lather, rinse and repeat. With persistence and good luck, you may have the same success I did.
