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Paypal GIFT Payments -- Illegal for Affiliates?

by The Oilman
8 replies
I've foudn that when I send paypal money as a "gift" it removes the fees.

Is this illegal to do if I pay my affiliates this way?

Does PayPal get mad?
#affiliates #gift #illegal #payments #paypal
  • Profile picture of the author Dan C. Rinnert
    It's when the recipients re-gift that you'll end up in trouble.
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  • Profile picture of the author The Oilman
    Can you elaborate for me?
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    • Profile picture of the author Dan C. Rinnert
      Originally Posted by The Oilman View Post

      Can you elaborate for me?
      You mean you were serious? I thought this was an April Fool's Day thread...
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      Dan's content is irregularly read by handfuls of people. Join the elite few by reading his blog: dcrBlogs.com, following him on Twitter: dcrTweets.com or reading his fiction: dcrWrites.com but NOT by Clicking Here!

      Dan also writes content for hire, but you can't afford him anyway.
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  • Profile picture of the author SageSound
    If you used any sort of "instant commission" script, your affiliates would be getting paid DIRECTLY by customers, and it wouldn't matter. You'd also save a bundle of time, not have to hassle with collecting and disbursing funds every month, and not have to deal with getting tax info from each affiliate or sending out 1099's at the end of the year.

    Most likely you don't do that yourself, but you pay a tax professional to do it; does the cost of the tax professional exceed the savings you'll get by sending funds as "gifts"? Oh, wait. Sending funds as "gifts" doesn't save YOU a penny. Damn nice guy you are!

    And NOT sending out 1099's puts you in the IRS cross-hairs for a very EXPENSIVE situation for failing to follow the laws.

    Using "instant commission" scripts, if your PayPal account were to be frozen for any reason, none of your affiliate funds would be at risk, since affiliates get paid directly by your customers.

    One thing I can assure you of: PayPal doesn't care if you waste your time processing affiliate payments manually or letting affiliates get paid directly.

    But your affiliates sure will like you more! (For one thing, they won't have to give you their SSN or other tax-related info.)
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  • Profile picture of the author The Oilman
    I do not have a payment script that instantly pays the affiliates, nor can I set one up with my current setup.

    I pay my taxes and report all my income. I am not trying to avoid taxes here. And I send my people a 1099.

    I have no clue what yo mean by this.

    "Sending funds as "gifts" doesn't save YOU a penny. Damn nice guy you are!"

    ...

    And I think even if I had a script that paid the commissions, i'd still have to send a 1099 to the affiliates, if they've made over 500.
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    • Profile picture of the author ARVolund
      He means exactly what I asked. Why would you take a chance on losing your Paypal account for doing something that saves you no money at all.

      A lot of risk and no reward.

      Originally Posted by The Oilman View Post

      I have no clue what yo mean by this.

      "Sending funds as "gifts" doesn't save YOU a penny. Damn nice guy you are!"
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  • Profile picture of the author ARVolund
    Is it illegal? No.

    Will it make Paypal mad? Most likely.

    The gift option is supposed to be for personal transfers and I would bet a fair amount of money that Paypal would not consider affiliate payments to be of a personal nature.

    Easy way to find out is to ask them. I would do that before you lose your account for trying something that sounds like a bad idea.

    Just curious but why would you consider doing this? It is not going to save you any money and you are taking a chance on getting into hot water with your payment processor for doing something that does you no good at all.

    Richard



    Originally Posted by The Oilman View Post

    I've foudn that when I send paypal money as a "gift" it removes the fees.

    Is this illegal to do if I pay my affiliates this way?

    Does PayPal get mad?
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  • Profile picture of the author eQuus
    It's not worth the hassle, and keep Murphy's Law in mind.
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