Mark Feldstein & Associates

The Canada Revenue Agency announced on October 23rd that only 50 Canadian Ebay merchants have come forward to pay their back taxes since July 2009.

The Revenue Minister gave Ebay sellers one last chance to pay the taxes without penalties and prosecution. Ebay has announced that it has sent thousands of names to the CRA. CRA has announced that it has begun launching audits of Ebay sellers. CRA is looking at sellers that have sales of at least 20,000 and had 24 sales transactions in one year or made more than 100,000 in a year regardless of the number of transactions.

It is evident that Ebay sellers are not taking CRA seriously in these matters.

CRA has hired many new auditors including many experienced individuals from the Ontario Minister of Finance. Once CRA has commenced an audit it is too late. There will be extensive penalties, interest and possible criminal charges.

Time is quickly running out for Ebay sellers.

I have done several voluntary disclosures for Ebay sellers. These individuals can relax now knowing that they have come clean and that there will be no penalties and prosecution.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Amnesty ebay seller, tax penalties, Unclaimed Income

In September 2009, eBay Canada received a court authorized requirement from the Canada Revenue Agency. Ebay must now release the account information and sales data of Canadian eBay members that meet the following conditions:

• Sales of more than $20,000 and at least 24 sales transactions in any of the calendar years 2006, 2007 or 2008, (irrespective of membership in eBay’s PowerSeller program); OR
• Sales of more than $100,000 in any of the calendar years 2006, 2007 and or 2008, regardless of the number of sales transactions.

If the seller meets the above conditions, then the following information will be handed over to CRA:

• full name,
• user id,
• mailing address,
• billing address,
• telephone number,
• fax number,
• email address, and
• the selling prices of the items.

This is the second court order that eBay has received from the Canada Revenue Agency. In November 2008, after lengthy litigation with CRA, eBay was required to hand over the information of members who held PowerSeller status in 2004 and 2005.

CRA announced on July 30, 2009 that they will aggressively audit Ebay sellers commencing September 2009. If CRA has not commenced an audit on an Ebay seller, then they can apply under the voluntary disclosure program to bring their taxes up to date without criminal prosecution or penalties.

If a voluntary disclosure has not been done and CRA commences an audit, there can be severe penalties, prosecution and interest charges. Time is quickly running out for Ebay sellers who have not done a voluntary disclosure to properly reflect their taxes.

In my office we have already commenced doing voluntary disclosures for Ebay sellers. Once a voluntary disclosure is made, the taxpayer has 90 days to amend their returns and properly reflect their Ebay sales. I usually prepare the voluntary disclosure in my first meeting with my clients and send it immediately to CRA. From this point on, the taxpayer is protected from penalties and prosecution. My clients usually will have peace of mind from the moment I send the disclosure to CRA. Most people tell me that they have not been able to sleep at night for years knowing what they were doing was illegal.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Amnesty CRA, criminal charges, ebay seller, tax penalties, Unclaimed Income

CRA will commence auditing EBay sellers this fall. Jean-Pierre Blackburn, the Revenue Minister announced on July 30, 2009 that anyone who has sold products on EBay could avoid audits, penalties, interest and criminal prosecution by doing a voluntary disclosure and declaring the income to the CRA.

Doing business on EBay is no different than regular business and the income should be reported.

CRA won a decision in the Federal Court of Canada against EBay Canada and now has access to EBay sellers’ revenue information. CRA is not interested in individuals who infrequently sell personal items at a loss. You do not pay tax on personal use property at a loss. CRA obtained information from EBay and is now going through a matching process to look for potential audits. They will be matching the information from EBay to GST and tax returns filed. CRA has now put EBay sellers on notice.

Once a voluntary disclosure is made with CRA the taxpayer has 90 days to amend or file the tax or GST returns. During the 90 day period, the taxpayer is protected from prosecution.

Mark Feldstein Corporate Taxes, Personal Taxes, Tax Amnesty CRA, ebay seller, Tax Amnesty, Tax Evasion, Unclaimed Income