GetVerifiedStatus should do the trick. You'll have to pass the email address and the name of the person and it will then return whether or not their account has been verified.
If they don't have a PayPal account you'll get an error back that says "Cannot determine PayPal Account status."
Here's a sample of the request and response I just ran on the sandbox for a verified PayPal account...
<?xml version="1.0" encoding="utf-8"?>
<GetVerifiedStatusRequest xmlns="http://svcs.paypal.com/types/ap">
<requestEnvelope xmlns="">
<detailLevel>ReturnAll</detailLevel>
<errorLanguage>en_US</errorLanguage>
</requestEnvelope>
<emailAddress xmlns="">sandbo_1204199080_biz@angelleye.com</emailAddress>
<matchCriteria xmlns="">NAME</matchCriteria>
<firstName xmlns="">Drew</firstName>
<lastName xmlns="">Angell</lastName>
</GetVerifiedStatusRequest>
<?xml version='1.0' encoding='UTF-8'?>
<ns2:GetVerifiedStatusResponse xmlns:ns2="http://svcs.paypal.com/types/aa">
<responseEnvelope>
<timestamp>2013-01-05T00:07:01.729-08:00</timestamp>
<ack>Success</ack>
<correlationId>3fecb3e1f2011</correlationId>
<build>4055066</build>
</responseEnvelope>
<accountStatus>VERIFIED</accountStatus>
<userInfo>
<emailAddress>sandbo_1204199080_biz@angelleye.com</emailAddress>
<accountType>BUSINESS</accountType>
<accountId>E7BTGVXBFSUAU</accountId>
<name>
<salutation></salutation>
<firstName>Drew</firstName>
<middleName></middleName>
<lastName>Angell</lastName>
<suffix></suffix>
</name>
<businessName>Drew Angell's Test Store</businessName>
</userInfo>
</ns2:GetVerifiedStatusResponse>
And here's a sample of a request and response where the PayPal account doesn't exist...
<?xml version="1.0" encoding="utf-8"?>
<GetVerifiedStatusRequest xmlns="http://svcs.paypal.com/types/ap">
<requestEnvelope xmlns="">
<detailLevel>ReturnAll</detailLevel>
<errorLanguage>en_US</errorLanguage>
</requestEnvelope>
<emailAddress xmlns="">nodice@fail.com</emailAddress>
<matchCriteria xmlns="">NAME</matchCriteria>
<firstName xmlns="">Drew</firstName>
<lastName xmlns="">Angell</lastName>
</GetVerifiedStatusRequest>
<?xml version='1.0' encoding='UTF-8'?>
<ns3:FaultMessage xmlns:ns3="http://svcs.paypal.com/types/common" xmlns:ns2="http://svcs.paypal.com/types/aa">
<responseEnvelope>
<timestamp>2013-01-05T00:08:28.581-08:00</timestamp>
<ack>Failure</ack>
<correlationId>43364ce704211</correlationId>
<build>4055066</build>
</responseEnvelope>
<error>
<errorId>580023</errorId>
<domain>PLATFORM</domain>
<subdomain>Application</subdomain>
<severity>Error</severity>
<category>Application</category>
<message>Cannot determine PayPal Account status</message>
</error>
</ns3:FaultMessage>
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