CRA Targets eBay Power Sellers. Who Is Next?

It is no wonder the Canada Revenue Agency is looking around for some cash…our generous Government gave billions to big guys from auto and financial industry, and will try to mend its fiscal holes by squeezing Canadian taxpayers.

The CRA is stepping up its efforts to track down eBay merchants who haven’t paid taxes on profits made from selling goods on the popular auction website.

To date, only 50 Canadian eBay merchants have come forward to pay their back taxes since July, when Revenue Minister Jean-Pierre Blackburn gave high-volume eBay sellers one last chance to pay their taxes without penalty.

Under Canadian tax law, profits on goods someone sells are considered income, no matter what the venue. A recent court decision forces eBay to hand over the names, addresses and sales records of its high-volume merchants to tax officials.

Citing privacy concerns, eBay wouldn’t reveal the number of merchant records it has sent to the CRA, but did confirm it’s in the thousands.

The company says it informed its users ahead of time that their records were being passed on to tax authorities.

The CRA told CBC News it received 9,939 files from eBay. So far, the federal agency says it has processed only nine of the proactive voluntary disclosures and that those nine represent about $275,000 in previously undeclared income.

The CRA also says it has begun launching audits of merchants whose names were released by eBay but have not come forward.

High-volume sellers, according to the court order, are those who made at least $20,000 and had 24 sales in one year or who made more than $100,000 in a year, regardless of the number of transactions.

EBay Canada began providing the revenue agency with information and sales records last November.

The move followed a Court of Appeal decision in April 2008 that upheld a Federal Court judgment requiring eBay Canada to provide tax officials with full account information on sellers.

If an individual or business does not comply with Canadian tax laws, they may be forced to pay any outstanding taxes, plus interest, and could face fines and other sanctions.

Taxpayers who came forward under the voluntary disclosures program will not be penalized or prosecuted if they make a full disclosure before the revenue agency starts any audit or compliance action.