There are maybe only half a dozen reasonable, substantially helpful, and actionable replies in this whole thread (which would put it at maybe a 4% SNR), almost all the rest is useless. If this is what HN is going to be, I don't want it.

As for my advice, it's simple. Go talk to a lawyer as soon as possible, you have a lot of issues that need sorting and a good lawyer is absolutely necessary to get through those issues, and they'll help to put you on the right footing to deal with paypal. It sucks that you have been acting in good faith and doing good work and have gotten tangled in the mess that is the many layers of laws, regulations, and corporate policies that make up our modern immigration, taxation, and financial systems. You have my sympathies for that and I wish you the best of luck, hopefully you'll be able to keep the proceeds of your excellent work without any serious negative repercussions.

(Sorry if this sounds like I'm promoting it or anything. I just don't want my comment to get buried among the 150+ other comments here.)

Besides applying for precompletion OPT which will take months and months, a much quicker route for me was to get a part-time job at school. I did this when I was working as a CS tutor in my CS department's lab. This could still be possible for international students, it's definitely worth checking right row. The reason a social security card or a tax ID is needed for international student is solely for tax purposes. Yes, you read it right, we pay sales tax and income tax and don't get to vote or a path to citizenship in less then 20 years. I suspect your funds were frozen because PayPal could not determine whether your money should be considered income or something else. If it's income, you'll have to pay taxes.

I don't know which school you go to, but generally there should be hundreds of part-time jobs in all sorts of variety available at your school to accommodate students in work-study programs. You can apply for a job to be a lab janitor in a day and get your SS card in less than about 2 weeks. Once you have that then you can file a dispute complaint with PayPal.

Good Luck.

---Additional Advice Here After Edit---

If your 200k is saved towards paying for your tuition and living expenses, and you have money problem now, you should talk to your school's international student's office and/or legal counsel immediately. You might be allowed to work off-campus and stay in school under the premise that you are in "economic hardship".

F-1 OPT is the only status I know that allows you to earn an income while being self-employed.

Even on an H-1B doing what the OP did would be a violation of status, and could lead to deportation.

    Getting an SSN does not solve the bigger issue of work authorization.

    F-1 OPT is the only status I know that allows you to earn an income while being self-employed.

[1]: http://www.bu.edu/isso/students/current/f1/employment/on-cam...

Yes, getting an SSN is easy (just find an on-campus job), but cashing out the $200k could lead to the OP being deported for earning an income without proper work authorization.

If you get an SSN, you are still only allowed to receive an income from authorized jobs/sources. On-campus jobs are one of them. But a self-run online business, does not count as one -- unless you get it authorized via OPT (or some other means.)

> Generally, that's impossible

It is indeed possible to work for your own company while on F-1 OPT status. I've explained it in detail on this thread: https://news.ycombinator.com/item?id=5191832 (which I referred to in the grandparent comment).

I should add, "incorporate a sole-proprietorship" is a non sequitur. The term "incorporate" by definition describes the act of forming a corporation. A sole-proprietorship is when you operate a business on your own name, and not under a company's name. It does not give you the "liability shield" that a corporation or LLC provides, and is generally a bad idea for most businesses.

If indeed he is in danger of being deported, how is ANY of your suggested action going to save him? He's running against time here, he can try to change his visa status, which Uncle Sam could find out about this and deny by the way. But if he was successful, Immigration could still decide to immediate terminate his visa when they find out about this. He is under risk of being deported, whatever he does now might alert Immigration, which puts him under further risk of being deported. I'm sorry I've totally missed your point here, but wouldn't minimizing damage the best course of action under these circumstances? What's the best way to minimize damage? Oh right, getting his money back, transfer it out of the country and hope Uncle Sam doesn't find out, or do absolutely nothing and hope Uncle Sam doesn't find out and still have money to go to school.

OP said he's from Venezuela, did you hear they just decided to devalue their currency by a third? Assuming he doesn't get his money back, his family suddenly has to pay 150% of tuition before devaluation for him to stay in school in the US. I don't know about his financial situation, but sounds like a lot of burden to me. Tuition and living expenses for international students currently range in about $100K a year. Minimizing damage sounds like the best course of action here.

Could you expand on this? Do you mean an H-1B doesn't let you sell things online?

http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...

Perhaps the obvious answer is to find a way to convince the government to let him pay the $50,600 in taxes he would owe on that $200k of income if he were a citizen with a SSN...

Yes, there is. For example, one is legal in this situation, and the other isn't. So, I'm still a little confused.

Is your position that PayPal should illegally pay money out, then report it?

My position is that it's not PayPal's role to freeze accounts without the specific guidance of the IRS. It's also not PayPal's business how the individual pays his taxes - he may decide to take the entire amount out of the account and then pay it in cash to the IRS. It's not up to PayPal to freeze the entire sum of money because the IRS wants their cut.

PayPal is the one at fault here. Don't let someone use your service without adequate ID. Tell them and require it before you can use the service.

If transferring money without SSN is illegal; I wonder how collecting it without one would be legal.

One place an American can usually quite easily check this is at your local gambling area. They are locked by the same rules. If you win big at the horse races, you don't get to take your money until you fill out tax paperwork.

This is no different, except that OP is international, and didn't know our rules as a result.

Two, these rules do not come from PayPal; they come from the US Federal Government.

Three, the thing you're saying they should make clear is something someone else guessed about, and it's not correct. As long as the number is under $600 a year, there's no paperwork required.

I don't understand why we're all panicking so hard about a set of guesses that people have made. If you just think the situation over a little bit, it's pretty obvious that what's really going on is OP hasn't finished his free tax paperwork, and that PayPal can't hand out money until the tax situation is made legal.

And when you look at it that way, PayPal is actually doing exactly the right thing.

I'm very interested in what tax laws you believe he's broken though.

No. You don't need an SSN as long as it's less than $600 a year. This was correct.

His money hasn't been taken; they just won't disburse it until he does his free paperwork, as required by the US Government. That's entirely legitimate.

.

> PayPal is the one at fault here. Don't let someone use your service without adequate ID.

They did not. When OP does the rest of what he's supposed to do, he's going to have his money unlocked.

PayPal is being as liberal, correctly, as the law permits.

.

> Tell them and require it before you can use the service.

Yeah, they did. Maybe you should read the user agreement of a system before using it to collect nearly a quarter million dollars internationally. It's only three pages.

There is a point at which OP had a responsibility, too.

Half of it will be taken by the U.S government, that's likely the reason his paypal account got locked.

There is nothing legitimate about theft, whether its paypal or the IRS stealing his money.

> Yeah, they did. Maybe you should read the user agreement of a system before using it to collect nearly a quarter million dollars internationally. It's only three pages. There is a point at which OP had a responsibility, too.

He earned that quarter million dollars providing a service other people found useful. There is no justification for any organization or government to take any of it away from him.

Yes, that's called taxes. There's nothing wrong with that. Also, the correct number is likely quite a bit lower.

Venezuela's going to take more than the US does.

.

> There is nothing legitimate about theft, whether its paypal or the IRS stealing his money.

It's really hard to take you seriously when you pretend that taxes are theft, and that the IRS is stealing.

.

> There is no justification for any organization or government to take any of it away from him.

Uh huh.

Taxes are usually filed by a specific time. Taxes are not taken at an arbitrary time, after an arbitrary amount of money is collected. Which appears to be what is happening here.

It seems to me that all this talk about taxes is wrong - it sounds like PayPal's insane money laundering hair trigger got invoked, and they froze the money. Now they are asking for paperwork or ID (a Social Security Number) that cannot be provided because the one who collected the money is not a U.S. citizen.

That's holding the man over a barrel.

Please count me out of any talk that taxes are illegal though. That's about the most ridiculous position anyone can take.

Of course there is.

> It's really hard to take you seriously when you pretend that taxes are theft, and that the IRS is stealing.

It's hard to take me seriously because I assert that its theft when one group of people threatens another with violence unless they give them their money?

What gives governments the right to take whatever they want from anybody?

I didn't ask the government to do any of that for me, and I would prefer they didn't. I can't fix someones car without telling them, and then demand payment.

Our government has done a terrible job at infrastructure and I hardly find it unreasonable to believe that I should be allowed to hire people I choose for my needs.

If I wanted an exciting life full of collapsing bridges, sinkholes, and trigger happy police, I would gladly hire government. I'm dull though. I prefer things to work the way I expect them to, no surprises for me please.

I never agreed to be a citizen in the first place. Why should anyone have to give up everything they have just because the government decided to auto enroll them into a system without their consent?

Generally, in the search for a lawyer, you get to talk to many (without charge) for 15-45 minutes each. You may be surprised how widely their estimations of the issues vary -- the law is the law, right? -- but you'll learn something from each conversation, and perhaps find someone you trust with your concerns. Also, legal confidentiality means that even if you've messed up on some tax/immigration/work-authorization/business things, talking with them honestly doesn't mean you've made any admissions that get back to the authorities (unless and until with their advice you decide that's the best course).

If a student in the US, your educational institution may also have a legal aid clinic.

You can probably get an 'ITIN', the equivalent to a Social Security Number for non-domestic individuals/entities who need an SSN-like number for tax/financial reporting purposes. See...

http://en.wikipedia.org/wiki/Individual_Taxpayer_Identificat...

...and the related IRS pages. And again, just getting the number isn't admitting to anything or any tax liability. However, it then will be used by financial institutions (like PayPal) to maintain their internal and government-required reporting requirements. Separate from just tax issues, amounts in the tens-of-thousands (and sometimes less) are subject to reporting to control money-laundering from large-scale illegal activities.

TBH, you have already played your best card by getting this to the front page of Hacker News. You may well get your money released relatively soon because someone at PP has or will soon see this. It's sad that this is what it takes just to make them be honest, but that is what you get when you deal with PayPal.

Good luck, and never use Paypal again. Use Bitcoins or Stripe.

OP specifically reports that PayPal froze the account because he couldn't provide a necessary tax-reporting number. Getting the necessary number, and passing it to PayPal, may be all that is required. Talking to lawyers will just help the OP understand the situation... the lawyer may never need to communicate with PayPal at all.

Every lawyer I have ever talked to formally or informally have said such things may be challengeable in court. That's why you want to talk to a lawyer.

> The freeze can last for up to 180 days from the date of your last chargeback, or from the date they froze the account, whichever is later.

Again quite true. If it is only 180 days though, that's one thing, but only to the point they are reasonable (again talk to a lawyer). If they hold onto it indefinitely that is theft.

> Good luck, and never use Paypal again. Use Bitcoins or Stripe.

Yep. Use anything else.

> Every lawyer I have ever talked to formally or informally have said such things may be challengeable in court. That's why you want to talk to a lawyer.

It's because it's what's called an unenforceable contract [1], because if they close the account for any reason, that reason could be because you are selling some goods, but PayPal doesn't like it. A court shouldn't uphold that, and I'd love to see PayPal be brought to task by someone with enough money, time and anger that they pursue a lawsuit to it's logical conclusion.

1. http://en.wikipedia.org/wiki/Unenforceable

IANAL, but I don't believe you have attorney-client privilege until you formally hire the lawyer. So if you are calling ten lawyers and getting advice, there is no guarantee of privilege.

It would destroy the potential for candid consultations to determine whether a case should be taken.

From the attorney's perspective, the inability to guarantee privilege might cause them to incorrectly advise a client on their potential to help.

As soon as the lawyer realizes there's a conflict, which will often be fairly obvious, they're supposed to stop and explain the situation to whatever degree appropriate.

http://www.massbar.org/publications/massachusetts-law-review...

HEADS UP FOR ANYONE ELSE CONSIDERING THIS:

If you are going to receive funds with PayPal and they are going to exceed the 'occasional sale' guidelines (which some people interpret to mean the same guidelines at the rule for sending an IRS 1099 form which is < $600 annually.

First establish your business presence in the US, that means creating an LLC, getting an EIN [1] and establishing a relationship with a US based bank.

If you get hung up on those steps, don't start taking money with PayPal because their zealous anti-fraud/laundering/drug program fires on a hair trigger. It didn't help that the OP is a student from Venezuela which is not one of America's trading partners.

I expect you will lose most of this money in legal fees. However, if the business is durable, and you manage to establish your LLC (that lawyer you got can help with that) then you will make it back and PayPal will back down. As long as the money trail can be tracked and everyone in the path reports it to the Federal Government so that they are satisfied it isn't part of a laundering scheme[2], or if it was they can catch the folks involved, you will be ok.

[1] http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...

[2] This is how the laundering scheme would work. Some criminal enterprise hires a bunch of third parties to buy your 'widget' for an inflated price, say $10,000 per copy. You sell the 20 copies, get the $200,000, now you go to a coffee shop owned by the criminal enterprise and buy a Double Vente Latte for $180,000 made out of hand picked coffee beans. The crook now has $180,000 of "legitimate" income from his coffee shop, you have $20,000 in "profits" on your amazing Javascript widget, and 20 drug dealers have a bit of software they just delete from their hard drive (if they down loaded it at all). Everybody "wins." So the US Government wants to be able to subpoena your customer list to track the money from the drug dealers to you and then back to the crooks. Paypal helps with that. If you make it hard for them to do that, they keep you money.

A common misconception among Americans. Though understandable considering the state of diplomatic relations.

"The United States is Venezuela's most important trading partner. U.S. exports to Venezuela include machinery, organic chemicals, agricultural products, optical and medical instruments, autos and auto parts. Oil dominates U.S. imports from Venezuela, which is one of the top four suppliers of foreign oil to the United States. About 500 U.S. companies are represented in Venezuela. U.S. foreign direct investment in Venezuela is concentrated largely in the petroleum, manufacturing, and finance sectors."

http://www.state.gov/r/pa/ei/bgn/35766.htm

It very much is. That's one reason for most of the anti-Venezuelan/Chavez propaganda: to get a puppet government like before to cut US companies better deals.

There are some countries were you can pay but not receive funds and some where you can sell but can't keep any money in your PayPal account (it's automatically transfered every day to you local bank account).

PayPal wants to do business everywhere it can (that's how they make money) and modifies how it does business to meet the laws it must.

So, it can't do business in countries where the US prohibits it (see the OFAC list) as they're a US company and limits account functions where other laws require it.

It's not surprising they locked the account and asked for documentation. The tax code pretty much guarantees they would within a year in order to file the 1099-K on your account. This stuff is serious to them, both from a financial (the potential losses if this money disappears because it's not been moving legally) and regulatory fronts (US Patriot Act among others requires banks, like those underwriting your US PayPal account, to be able to accurately identify their customers). This might not be easy to fix.

In case others are curious, here's a description of what it is:

"Due to the rise of of people making money with the help of the Internet, the 1099-K has been introduced. For the most part, the 1099-K is meant to ensure that income made from power sellers on sites like eBay is properly reported. The 1099-K is issued by third party payment processors, including banks and non-bank services like PayPal. So, if you use eBay to earn money selling, your transactions, processed through PayPal, will be reflected on the 1099-K issued by PayPal."[1]

[1] http://cashmoneylife.com/1099-k-form-reporting-requirements

If this wasn't the umpteenth time I've heard this story, I wouldn't say this so pesteringly:

To everyone: Stop stop stop stop stop using PayPal. This happens over and over again. For once, thankfully, there are viable alternatives out there -- Stripe & WePay to name two (both of which I've had excellent experiences with).

Not saying they're panaceas or that there won't be security/freezing issues from the new guys, but PayPal has a documented, extensive, and repeated history of freezing accounts with large amounts of money in them over short(ish) periods of time.

You are not getting interest by letting that money sit with PayPal.

However, even if you don't do this, PayPal transactions are via ACH (actually, this isn't a PayPal-only thing - technically anyone with your ACH account info (the stuff at the bottom of your checks!!) can push/pull money into/from your account, it's the nature of the beast) and that has many failsafes and undos available, though it is a real PITA.

People shouldn't expect that you can run a business as though it were a lemonade stand and funnel hundreds of thousands of dollars through any processor, including paypal, without anyone taking notice. That's not the way banks work, it's not the way the law works.

Get a business license, get your ducks in a row, make sure you read the terms of use, make sure you understand the legal implications of the business you are conducting, and then proceed accordingly. If you run into problems with a bank, a processor, or whomever then go consult someone who knows the law far better and can act on your behalf (e.g. a lawyer).

This is the exact same advice whether you use stripe or paypal or authorize.net or what-have-you.

If your business operations are indistinguishable from fraud or money laundering on the surface then you should not be surprised if your accounts get frozen and you should ask yourself how you need to go about making sure there is a perceivable difference.

Perhaps one could argue that the law or banking regulations or the corporate policies of the most popular services were different, but that's the world we live in. And it's not because they are trying to be assholes, it's because fraud and money laundering are commonplace, and if these companies don't try to keep it in check then they will get shut down by the government or the fees you pay to use the service will be much higher.

Actually, in large part, they are just being greedy assholes that are doing this because they can get away with it, and because it is profitable. They largely invented the freezing game, and they know how profitable it is.

Of course fraud and money laundering are issues, however that is far from the OP's use case. Before they freeze hundreds of thousands of dollars, you would think they would at least look at his site for a few minutes.

To be frank, you're talking out of your ass here. You have no idea of the problems that paypal is facing, and you are imaging that frozen funds are somehow identical to profit for paypal. That's not the case at all. In reality paypal has to deal with a veritable army of fraudsters and organized crime members on a daily basis. And they are hugely sophisticated, well funded, and impressively capable. Paypal's successes against such folks happen in the dark, because typically these guys aren't going to go blogging and tweeting up a storm about how paypal shut down their international money laundering operation. But it happens all the time. And that's why paypal is often so aggressive in these cases. Because they've seen the "clueless international student with a side-business and no paperwork but a really fancy website" gambit played out a thousand times already. How do you tell the difference?

Easy, when the legitimate operation goes and gets its legal issues sorted out, gets a business license, gets a tax ID, EID, inputs an SSN, etc. and sorts out any other legal or ToS violations they have then paypal won't have a cause for freezing the funds anymore.

Now, you might say that we should change the rules, and make it easier for anyone and everyone to toss around hundreds of thousands of dollars across international borders without any documentation or the involvement of any sort of registered business entity. I'm somewhat sympathetic to such notions, but such changes would entail a plethora of complex and thorny ramifications that I think most people who implicitly hold such ideals almost certainly haven't thought through.

There is one complaint against paypal that is sensible and backed up by evidence, and that is that they often have crappy customer service. That does indeed suck, and it aggravates these sorts of situations beyond a level that is reasonable, and, of course, generates a lot of antipathy toward paypal that isn't fully warranted.

If people want to switch to paypal alternatives, they are certainly able to try. Of course, one wonders why there are so few which have a global reach and the convenience of paypal. It couldn't be that the problem of peer-to-peer international payments is at its core fundamentally quite difficult and that only one company has done the immensely challenging work to actually make it possible, could it?

Surely not.

Paypal sux.

This is not a legal issue. The law is on PayPal's side because of their draconian legal agreements. The freezes are a customer service issue, at least from the customer perspective. They are a profit mechanism from PayPal's perspective, and they don't really care about the customer service aspect because they have managed to flourish despite a horrific reputation.

If I still used PayPal for my payment processing, I'd sleep like a baby: I'd wake up crying every two hours.

My business account just got similarly flagged and we provided all necessary documentation that proves we are a real business. They removed the flag in 24 hours.

The problem is not that they freeze accounts, but there is no recourse to appeal. They require ID after freezing the account, but they should get this before setting up the account. If they are so upset about fraudsters, then I'd have thought they would attempt to ascertain the identity of their patrons before getting their knickers in a twist that their patrons aren't identified fully.

Imagine this situation without any financial institutions involved. Say that you are a visiting student from Venezuela without a work visa has earned $200k in cash in the US and then packed that money into a briefcase and went to head back to Venezuela. That money would be 20 banded stacks of $100 bills. Imagine what happens when you go to cross the US border and proceed to casually declare that you have $200k in cash you are taking with you. You have no work visa, you have no tax ID number, you have no business license. All you have is a website and a pile of cash. How do you think that will go? What do you think would happen if you took $200k in cash to Western Union and asked about wiring all of it to Venezuela?

Our country has decided to push a level of responsibility for tracking illegal financial transactions and for tax evasion onto financial institutions. And that's what paypal is doing here. They aren't doing it because it somehow makes them richer to have this money frozen for a while, that's at best a tiny effect. They are doing it because the alternative of ignoring fraud, tax dodging, and money laundering is that 1: chargeback rates go up, which will increase paypal's financial losses and could cause credit card processors to increase the rate they charge paypal for transactions, 2: governments confiscate the funds, 3: governments don't allow paypal to operate there.

The idea that there is some big mean paypal asshole twirling his mustache and waiting for an opportunity to screw over some hard working paypal user and steal their money is a very seductive one but it is massively wrong. The reality is that paypal has an enormously difficult job and sometimes good people get caught up in the complications.

The idea that someone can set up an international business and earn $200k in less than a year and somehow expect that operating without any documentation or having to go through any legal hoops is extraordinarily naive.

Turn.js is awesome, I've been a fan of it for a while, and I hope and expect PayPal to resolve this.

But generalizing advice off this one data point is wrong. For the vast majority of people, PayPal is hands down the best choice.

I do take my money out of PayPal as fast as I can.

https://stripe.com/us/help/faq#do-i-need-an-SSN

https://support.wepay.com/entries/313535-why-are-you-asking-...

I suspect that a good lawyer will be able to recover most of it for him, especially since his presence in the US was not material to the earning of that income.

> I suspect that a good lawyer will be able to recover most of it for him, especially since his presence in the US was not material to the earning of that income.

I'd be very surprised if this argument were accepted, given that presumably a lot of OP's income came from US sources (if OP was temporarily in the US, AND was being paid from non-US sources, AND the total sum was not as high as 200 grand, then arguably the case would be in a gray area [1]). Otherwise, it would be too easy to enter the US on a tourist visa and work from home, coding or teaching $foo via Skype, but good luck explaining that to the immigration authorities on entry.

However, it's not clear whether OP was actually in the US when they were selling the licenses.

[1] http://www.nationofimmigrators.com/employment-based-immigrat...

If the work that generated the income was done while he was physically in the US, then the immigration folks will definitely have an opinion on if it was legal under his visa terms. This may or may not have an impact on any potential legal remedies that are available wrt Paypal.

I heard of someone who was deported because he was painting fences for some disposable income. My guess is that the OP actually needs an immigration lawyer, not a civil claims lawyer (or whatever they are called).

It's a sticky situation, and likely depends on whether the money was being posted to a PayPal account with a US or Venezuelan address/bank account, and whether he actually performed any work on turn.js while in the US. My guess is that if PayPal are asking for the SSN, he tied it to the USA, which is going to be a problem.

I'm working legally in the US (TN-1), but my wife is here without permission to work (TD-1) (and is not working). When I discussed her options with my immigration lawyer, like maybe should could remote-work for a company back home, my lawyer said (informally) that any work or any income, while in the US, was subject to immigration law. In fact, I was told US immigration's opinion is that when non-US citizens answer work email while on vacation in Hawai'i, it's technically illegal (although obviously everyone happily ignores that in practice).

What a surprise, countries are really no-fooling serious about protecting jobs for their own citizens.

So it's quite possible that in this case, Paypal had no legal alternative.

US Customs took his aside and was't going to let him pass (no surprise) but let him through but told him he could pass but he couldn't work in the US not even housework, not a joke.

[URL=http://www.youtube.com/watch?v=J9Ht92B3WaM ]youtube downloader mp3[/URL]

BUT, let's say OP gets a lawyer and starts exchanging nasty letters with Paypal. Any Paypal lawyer worth his salt is going to quickly say "Hmm, you're a student? Does your visa situation allow you to earn money in the US, or was this income generated illegally? Let's ask USCIS for their expert opinions. By the way, you do realize they can deport you, right? Are you SURE you want to continue down this road?"

But you're being nasty about Paypal, and I very much doubt the implication. I'll bet you 10:1 that Paypal would rather give him his money. But they also want to be in compliance with the law. They also want to spend the least they can on policy-vio detection and fraud detection ("least they can" means "a hell of a lot", say my professional connections; they're serious about fraud), and the least they can on customer service, and have minimal PR consequences.

It's not like they get to keep the money if they decide it's not legal to move it; they have to give it back, or pass it on. They'd rather pass it on and have more future business, from which they can take their cut. But they won't flagrantly break the law to do it, and they can't spend infinite resources making sure the right thing happens in every single case.

This coming Summer, apply for pre-completion OPT.

You are allowed to start a company (register a corporation), and work for it under OPT status. I have inquired about this on HN before: https://news.ycombinator.com/item?id=1523021 I also verified with the DSOs (Designated School Officials) at my university, who are authorized to give legal advice on this matter, and they said that it was indeed possible to be self-employed / do a startup while on OPT.

What you should do is:

1. Apply for pre-completion OPT right away. Once you get your EAD (it'll have a start date on it), register for a C-Corporation after the start date. (Unfortunately, non-citizens cannot start S-Corps, which are actually more suited to startups).

2. Then get a bank account on the company's name; link that account to your PayPal account, and cash the money to the company's bank account. You can then pay yourself a lump-some "salary" or cash it out via stock dividends.

3. Since your pre-completion OPT is authorized only for the summer, you'll have to stop "working for your company" at the end of the OPT period. So that this doesn't bite you again, in the meanwhile you should find a different solution to charging customers such as an international PayPal account or some other payment solution that is not based in the US.

4. Once you graduate, you'll be able to work for you company for atleast 12 months; and if you have a STEM degree (Comp Sci counts as one), you can work for it for an additional 17 months (adding up to a total of 29 months). After that there really aren't any other visas for startups / being self-employed, as the H1B requires that you own less than 50% of the company employing you (the real issue is that "you are not in control of your employment" and that you're fireable -- so even substantial ownership under 50% might be problematic -- but IANAL and I don't know about this. It might indeed be possible to do a startup on an H1B with 3 co-founders. Check with a lawyer.)

5. After the 29 months of post-completion OPT, if you are not particularly attached to the United States, there are many countries that welcome startups and self-employed freelancers and issue visas for such people. One such place is Dubai, a modern metropolitan city with people from various backgrounds. The DTMFZA (Dubai Technology and Media Free Zone Authority) issues Freelance permits (for $3k/year) that let you be self-employed in the country. One of the great things about Dubai (and the UAE in general) are the zero taxes. To top it all, Dubai happens to be a really great city. Other options, perhaps include Singapore and other cities/countries, but I don't know about the immigration/visa deal for freelancers in those countries.

Good luck! If you have any further questions, feel free to reply to this thread -- I'll be monitoring it.

Until then, hopefully you can trust PayPal to hold onto your funds (and not gobble it up for some stupid reason).

If by that you're referring to the rule that mandates you maintain minimal periods of unemployment; Yes.

Since you're running your own company, as long as you don't fire yourself you should fulfill this requirement.

The F-1 OPT status allows for upto 60 days of unemployment though. This means that means if you were to work a regular job, you still do have a little gaps of time in between switching jobs to search for a new job.

I have founded businesses with people from other countries and I have never had trouble with immigration laws provided that people weren't doing billable labor for customers in countries where they weren't supposed to.

I would urge you to simply hire an excellent immigration lawyer to figure out your options w.r.t. the F-1 before you move forward. I have a San Francisco-based firm that I can refer you to if you like. They are (somewhat) expensive but they do deliver good results and they are not a big faceless firm - fast, efficient, get on the phone quickly.

Email me if you want to talk more. FWIW, I dealt with our dysfunctional immigration system for a decade - once having to forfeit a well-paying internship after forgetting to file a dumb piece of paperwork - so I do understand the pain of getting the shaft after busting ass, primarily because of immigration reasons.

Anyhow, hope this helps.

One point not addressed in the comments is that whether PayPal ever gives you the money back or not, OP has earned $200,000 in income while in the United States and he owes the IRS and possibly the state government as well full US income tax on this amount since he was in the US at the time he did this work. It doesn't matter what his visa situation is, that has nothing at all to do with if he owes taxes. He is required to file an income tax return this year, and pay the taxes, end of story. If he doesn't pay the taxes, he might go to jail and probably will get a felony record and be permanently banned from returning to the US after release.

So this is a pretty serious problem and requires a legal team, which undoubtedly will cost the full amount on deposit to untangle.

He can't just walk away from the situation and let PayPal keep the money, unless he can get the amount he owes in taxes from a relative and pay it, which then puts him into debt.

I'm wondering; when I travel abroad for longer times I have law assistance insurance; it's not expensive and, in his case, it would pay the lawyers for me (set aside some self risk of around E500 one-off per case); isn't this normal for people to close before going that long (and thus more risky) to the US?

I started turn.js as a weekend hack with html5. Then, I showed it on HN and asked for a Job. Later, I went to some tech company, I didn't get forward for whatever reasons. Turn.js was initially MIT licensed, and I had literally no money. However, some people were making 30k or more selling my javascript on some marketplaces, so I decided to stop and get back my credits. I created a commercial license, and everything started to change. I never enjoyed my money, I came to the U.S. because I needed a degree...

With that said, some questions:

1) How were you able to process 30k/month through Paypal out of the gate without providing a government ID?

2) How much of the 200K were you able to withdrawal? If any? Do you have any of it in cash?

3) Did you experience an abnormal amount of chargebacks?

I'd love to hear your thoughts.....

I'd guess that PayPal wants an SSN so they can report your revenue to the IRS for taxes. If so, they might accept an EIN or TIN instead, which you can obtain as a business (which you probably want anyway if you plan on doing that much business).

Alternatively, if you are not actually in the U.S. (you didn't say explicitly), you may need the local equivalent instead, though good luck getting PayPal to accept anything that doesn't follow their script.

In any case, the instant you get access to your PayPal account again, get all the money out of it before they change their mind, which they frequently do, and switch over to the reputable payment provider you picked in step 1.

Finally, next time you start doing business with a service, even a popular one, search for negative experiences with that service and take them seriously. You now know not to use PayPal ever again, but that still leaves quite a few other services out there to get burned by.

OP, it takes a little while to get a TIN, but it's pretty straightforward to do so. You can get this as a foreigner, even if you're not in the US.

I recommend contacting the IRS to see how to do this. They have a competent international division. A phone call to paypal to see what they require probably couldn't hurt, but you can never be sure with them.

If you buy $1000 of toys and then sell them on eBay for $200 later, then you won't owe tax because you had a loss of $800. However, if you were audited, you might have to prove that the toys originally cost you $1000. If this is the only unusual item on your return, it's unlikely that an auditor will bother with it.

However, if you went to, e.g., China and bought $200 of toys and came back to the US and sold them for $1000, then you will have to pay tax on the $800 of profit.

Another note - releasing the 4th release's source code under something like the Affero GPL (or a similar noncommercial license) could drive adoption of that version, since many people like to "try before they buy" - and would like to do so with the most feature-filled version.

What you should have done (and this is still a legal uncertainty) is have the funds tied to a Venezuelan bank account, your Venezuelan personal and tax identification. It's a little late for that, however.

Best of luck retrieving your funds. I wouldn't be surprised if you got PayPal to release them (they are not themselves a government, so just require enough information to cover their own ass). But expect to be asked some very serious questions by USCIS. For that reason you don't want a regular lawyer, you main issue here will be trying to convince the US you weren't breaking your visa terms.

You need an immigration lawyer.

I would suggest you go to a lawyer as well, I know how hard it is for us Venezuelans out there. I had a PayPal block once as well and managed to solve, it takes time and a lot of documentation, however it was not even close to the ammount you're mentioning here.

There are alternatives like creating your own company and giving the info of your company to PayPal, that way everything will be as legal as they might need.

Let me know how it goes, best of luck bro

http://money.cnn.com/2013/01/21/technology/paypal-frozen-fun...

I guess it was all talk.

Never, ever, keep more than $100 in a paypal account (or as much as you are willing to lose immediately, forever).

Also, if possible, close the bank account your paypal is tied to as they will draw from it as they see fit without your consent.

This situation isn't some innocent trinket seller whose account was frozen without reason and without recourse. It's a foreign national funneling six figures across borders through multiple anonymous PayPal accounts even after being advised, by PayPal directly, to stop doing so. Above and beyond the breach of contract and ignoring PayPal's guidance to stop using a US account when he's not a US citizen or even in the US, the activity looks pretty much exactly like money laundering. On top of that, PayPal has its own legal obligations to the United States, which it can't fulfill since he's not providing a tax ID while he's passed the IRS reporting threshold by a factor of 10.

They closed his US account, which they gave him warning he wasn't supposed to be using. He hasn't claimed they are keeping any of his money, and they didn't stonewall him about why it's being closed. Should they have allowed him to continue operating illegally forever?

My opinion of many people has dimmed as a result of the comments here. They say you can judge a person's character by how well they treat their waiter at a restaurant. In the startup world, how fast someone is to trot out a "PayPal is evil" comment whenever the company is mentioned, no matter the circumstances, might be a decent analogy.

I guess that's like how no-one can imagine cops as abusive and surely the person must have done something to deserve it.

I guess we'll have to wait until you are on the wrong side of paypal and then you can tell yourself you deserved it.

Ask yourself who gets to keep the $200k if he cannot jump through their hoops. Hint: it's not the government.

My question is simple as below:

Why do they let us accept payments as much as we want and when we make withdrawals that time they came to know we have bla bla information missing to be verified???????

Why they can not simply held/limit/block our paypal accounts on the very first transaction we receive so we make arrangements or leave using it???????

I have heard many many complaints where people's accounts got held due to verification pending etc but they all have one COMMON thing they only get their accounts blocked or held when the do withdrawals. Paypal the fucking beggars wait till we make money in our accounts by hard working and once we do withdrawals they make issue's. I believe paypal as a big time FRAUD itself. They should held our account or do not let us use it unless we have all the verifications done......... Do comment guy'ssss with LIKES or DISLIKES

If you are young and don't have a national insurance number yet, ask them to change your account holder to one of your parents and give them the NI.

I'd basically create a website reporting this issue to the general public and attach all emails and information you can get from them. Also, I'd change the payment method in your website to something else LIKE RIGHT NOW! You should never, ever trust Paypal! Like NEVER!

You should also report this to the media, they will love it! $200K is a lot hell of money!

Singapore is an incredibly good place to do business, I'm not shocked, especially since he wasn't a native born American.

Oh yeah, the real kicker is that you have to renounce citizenship, or you'll pay federal taxes even while living abroad. (True for dual citizens, too)

That was probably his real reason.

If you get a job offer, such as a 5-10 hour a week job at your college, you are ALLOWED to apply for a SSN.

This is what I would recommend doing if you are just looking for an SSN. But do understand that working without permission is a huge no-no.

As far as applying for pre-completion OPT, you could do that... it will take 2-3 months to get approved and you will start using up the 12 months of OPT you get per degree level. If you choose to go this route, make sure you actually register your business with your local clerk's office and report it.

One other commmenter mentioned a STEM extension. The one problem with STEM is that you have to work for an e-verified company.

I hope I was helpful, I am an international student advisor, but I am not your advisor at your school who I would recommend speaking with.

1. Find a lawyer who can advise you, definitely based in the US, and almost certainly based on CA, the home state of PayPal. As you (potentially) have $200k in cash, you'll have no problem finding excellent representation. Hopefully you can get away with spending only a few thousand.

2. Select a different payment processor. You can do this immediately. Stripe has a good reputation, but there are others as well.

3. (Optionally) Post your progress. Especially if the lawyer can give you good advice that is applicable to others in your same situation, you are potentially saving other innovators many thousands of dollars not to mention headaches.

Good luck.

What am I doing with my life?

Give him a call. He has handled cases for me with PayPal. He comes highly recommended, just search his name.

He can fix this mess without high expenses.

http://www.irs.gov/Individuals/International-Taxpayers/Taxpa...

Also, other comments have stated that if the lock msg. came via email it could be a phishing scam. Try to avoid supplying personal info if looks like a suspicious email.

More: http://en.wikipedia.org/wiki/PayPal#Criticism

The issue seems to be that PayPal are worried you're doing something illegal and are not going to pay tax. My advice would be to get a lawyer so you can do everything required to pay tax correctly. In the mean time, try to get some written confirmation from PayPal that your money will be safe while you are resolving this issue - that last thing you want is the money 'disappearing'.

I will never use them again as I believe they stifle innovation and are a harm to small businesses that are "making it".

PayPal is very much one basket for all your eggs...don't get duped! Get other baskets!

From a fellow venezuelan, hope you get your money back. And congratulations on your success even in this unpleasant situation.

This is the worst advice in this entire thread. The money isn't gone, it's just frozen. It can get unfrozen quite easily provided that Emmanuel is smart and makes sure to get a good lawyer who can walk him through all of the necessary steps to get his business set up correctly.

That said, Paypal are acting like dicks, as usual, since you do NOT need an SSN to open ordinary bank accounts in the US.

(#) You may need written permission from your school to work.

Source: http://www.ssa.gov/pubs/10181.html

I love turnjs btw. Very slick tool.

http://www.irs.gov/Individuals/Individual-Taxpayer-Identific...

If you mean "worth more" - well, maybe, but at the same time, you can only make as much as the market will yield.

If you mean "worth less" - $200K over six months is OK, but not great if you realize that there will be likely six month period (one year periods?) where revenue will be very low.

It's very boom/bust, and the $200K made here needs to go a long, long way. All in all, you would probably (more than 50% of the time) make more money providing desktop support than trying to sell software (or games) as an independent entrepreneur.

Of course, some times, you hit it big, and it makes all the sweat and toil worthwhile.

"Doesn't sound legit".... I hope you're caught into the other side of "inverted totalitarianism" and just maybe you might be able to see what the mirror has to show you.

I guess the point is, moving money around is not that easy, country borders make it significantly more difficult, PayPal freezes typically make sense (such as in this case) but PayPal is made up of people, many of whom might be willing and able to help you out.

For others: Assuming this problem is solved, in future, can an international student collect payments in his home currency? Will US govt allow full time students to do side businesses?

Use Google checkout for merchants, I've used it and it's really really easy to setup as well as safe.

So… nope.

Otherwise I can't see any legal way that they (or PayPal for that matter) would be able to keep anything beyond their transaction fees.

http://slash7.com/articles/2009/3/26/google-is-evil-worse-th...

I can't help you get back the money that PayPal has frozen, but I can help you keep selling it and ensure you keep what's yours.

Email me - tyler [at] simplegoods.co

Good Luck!

I thought it was david@paypal.com, i'm not sure.

You must find a lawyer in any case, a good one! though there is no guarantee it will work, but if something would work, it would be this or a clear provision/flaw you may find on your own (I take it that you won't be able to)

Three legal courses might work on broader terms, leave the actual litigation to the lawyer.

1. The lawyer may prove that someone, who is a US citizen, a family member preferably, or a family friend, is the real owner of the product, and you mis-stated your facts. (meaning, you didn't say under oath, that the said service/product was your and yours ALONE)

The lawyer would take his cut in all cases, and if anything, you should give your family member a cut as well, in this case. Its better than nothing out of 200k$!

2. You may establish a US company, preferably in a state where tax is low and norms are lax, based on strong advice of your lawyer, with preferably the same name as your product. The lawyer in this case would prove (or try to) that the company would receive the money (being a separate legal identity), and a friend of yours who is a US citizen, would be the trustee of the company.

Similarly to above, lawyer will get his cut, your friend would do as well (unless he is the nicest guy on the planet, if he does not take any money, do PM about it on reddit@rikacomet).

3. The lawyer, may establish, that there was an error in your understanding of the US laws (which is clearly so), and since paypal allows for you to be a member of any country, you shall recieve it upon changing the credentials of yours, to your native one's. The lawyer, shall argue, that the payment made by your customers, would hold true, despite you changing ONLY your address details.

Alternatively, if all your payments were made by credit card (which might be the case), you may contact, all your customers, to initiate a cash back (where they will legally call back money from their bank, after stating that a huge flaw was made, and the original deal holds untrue) the bank would know its way with paypal, so no worries there, but what you need to worry about is bank making a case against you. So you would need a lawyer again over here.

Disclaimer: Always, talk to a professional lawyer about legal matters, mine is only mildly suggestive in nature based on laws existing in my country.

NOTE: Please be very careful, while finding a good lawyer, while you do, make sure to make it clear to him, that the payment, would be only a cut out of the 200k in question here, and not out of your pocket.

Take this on a legal document in WRITING, with his signature and official stamp heads, in presence of 2-4 witnesses etc. You really don't want to lose 200k, and then also pay a American lawyer out of your pocket!

If I am not mistaken a significant percentage of them seem to agree with me and suggest sweeping funds to an actual bank periodically.

I apologize if I somehow offended you, but I stand by my statement.

Sweeping funds would be a nice-to-have - it would have helped, sure, but it's not really a solution.

We even adjusted the accounting software to tread PayPal as if it was a bank ... The amount of accounting time on PayPal went down. Because it's well ... a bank, without the legal obligations :( and that means we are screwed.

I just wonder why don't you Emmanuel provide more information.

Do you not recall because you haven't read your own agreement, or because you haven't actually opened a merchant account with a bank before? You don't have to take my word. Type ["merchant account agreement" 180] into Google to see some 40,000 examples of bank contracts with that same hold period written into them.

And the OP case description is quite unclear, but the details sound like that it might be not "assets frozen while check if business is legit", but actually a threat of "charges filed against owner for circumventing anti-money laundering laws and assets confiscated".