Revenue Canada Successfully Court-Orders eBay PowerSeller Data

eBay.caVia the Globe and Mail, the Canada Revenue Agency is stepping up an investigation into high-volume eBay sellers and whether they’ve reported the full amounts of their revenue. The investigation goes back to 2004, including about 10,000 people. Under scrutiny are PowerSellers, users who sell more than $3,000 a year and receive benefits from eBay for it.

The CRA’s investigation has been stymied by eBay Canada because it has refused to turn over information about PowerSellers. The company argued the information was stored on parent eBay Inc.’s computers in the United States and beyond the reach of the CRA. It also argued the CRA’s probe was too broad and amounted to a “fishing expedition.”

The dispute landed in court and last week the Federal Court of Appeal dismissed eBay’s arguments. The court ruled the company has easy access to the records “with the click of a mouse,” putting them within the bounds of the CRA.

The court ordered eBay Canada to hand over the names, contact information and gross sales figures for the PowerSellers. The company said it will start turning over the material next week.

Some PowerSellers argue that the aggressive tax probe is unfair because many PowerSellers are amateurs who don’t treat their activities as a business and may not have complete back records. eBay Canada seems to have resisted releasing data until there were no avenues of appeal left. It’s reassuring to see that they are willing to stand up that far for user privacy. I don’t defend anyone cheating their taxes, but I suspect there are worse tax cheats out there than eBay sellers. At the end of the day, you can’t escape the tax man, and even if you don’t treat your activites as “professional business”, the CRA just might.