I talked to a paypal Rep about this for more details and if your not over the 20,000$ and or under 200 transactions they are not obligated to report it and send a 1099.
Keep in mind not EVER paypa account has SSN number for paypal to report it. Their mainly going ater the Big guys from Ebay and others alike using Paypal as an offshore account to store money.
I personally am weeding away from paypal due to their Buyer is always right crap and ripping us sellers off a lot