On August 5th PayPal announced that under new Housing and Economic Recovery Act of 2008, it will be forced to report to the Internal Revenue Service (IRS) a series of data concerning the total payment volume received by some of its US customers. The new legislation takes effect in 2011 and targets all American payments providers and their merchant customers.

According to the provisions of the new law, PayPal must report to the IRS the total payment volume for US customers who receive yearly payments in excess of USD 20,000 and who receive and send out over 200 payments per year. The first reports under the new legislation are set to reach the IRS at the beginning of 2012. PayPal has already expressed its intention to facilitate reporting procedures for its merchant customers who need to comply with the new tax compliance demands and report their taxable incomes.