If you receive funds directly to your Paypal account or some other electronic account, do you pay taxes on them? Can the government ever determine how much you've been paid nab you for not paying taxes?
In reality I don't earn much in PayPal to be taxable. However it is legal for people who earn money online in companies like PayPal have to pay their taxable income to the government. However there seems to be a possibility that you choose not to pay the taxes from PayPal earnings as none of the people I know are doing it currently.
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