Jul 16, 2017 · But not all sales, let along all money arriving into a paypal account is profit. If it's not profit, it's not taxable income, nor is it required to be reported by the payee to the IRS. The 1099-K which is issued, or not, by Paypal, says nothing at all about the tax status of the money. It is not required by law to account for the money on one's ...