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When Judy Baldwin started making several hundred dollars a month selling quilt supplies on eBay , she quickly became an eBay PowerSeller. But she also knew that she would have to start declaring that money on her taxes.

Now the Canada Revenue Agency will be checking to make sure roughly 10,000 other PowerSellers are reporting their eBay revenue as well, because of a court ruling made public yesterday.

The Federal Court of Appeal has upheld a lower court ruling and ordered eBay Canada Ltd. to comply with a request from the Canada Revenue Agency to produce the names, addresses, phone numbers, e-mail addresses as well as gross sales figures for all Canadian PowerSellers. The PowerSeller program applies to people who sell at least $1,000 (U.S.) a month through the site.

The legal struggle has been going on since 2006, when the CRA launched an investigation to determine whether these sellers reported all the revenue they earned through eBay on their 2004 and 2005 income taxes. So far, the CRA has won every court battle, but Andrew Sloss, eBay Canada's manager, said the company is prepared to fight on.

"What we are doing now is considering all the legal options that we have available to us," Mr. Sloss said yesterday. "We want to protect, obviously, the privacy of our members and we continue to contest the broad information requests [from the CRA] that don't have any specific named individuals in them."

Mr. Sloss said the company had about 10,000 PowerSellers in 2004 and 2005. There are five levels of PowerSeller status and qualifiers are eligible for prioritized support services and special promotions. There are likely far more PowerSellers today and it is not clear whether the CRA will audit them as well.

Ms. Baldwin, who has been a PowerSeller for five years, welcomed the CRA's probe. "Listen, if there's a PowerSeller out there who's not declaring their income ... then I think they absolutely should go after them in the same way they go after any business that isn't reporting," said Ms. Baldwin, who, along with her sister, runs Sew Sisters Quilt Shop in Toronto. "To me there is absolutely no grey area; if you are a PowerSeller, you need to be reporting your income to the government."

The legal saga began on Oct. 25, 2006, when CRA officials obtained an order in the Federal Court of Canada requiring eBay to hand over the information.

EBay challenged the order and the case dragged on for months. On Sept. 18, 2007, Mr. Justice Roger Hughes ruled that eBay had to comply. The judge set aside some legal issues for a hearing earlier this year, but he dismissed them all on Feb. 13, 2008. Officials from the CRA issued a formal request about a week later.

EBay appealed Judge Hughes' ruling and requested that the CRA's request be stayed, pending the appeal. But the appeal court threw out that request. "I conclude that [eBay Canada] has not established that it will suffer any harm from being compelled to disclose the information," Madam Justice Karen Sharlow wrote in the ruling dated April 17 and released yesterday.

It's not clear where this leaves eBay's appeal because lawyers for the company argued that the appeal would be moot if the data were handed over to the CRA.

One key argument raised by eBay was that the information was not physically present in Canada but was stored on computers in the United States controlled by its U.S.-based parent, eBay Inc.

Judge Hughes ruled that the issue of where information is stored "must be approached from the point of view of the realities of today's world."

He added that: "Such information cannot truly be said to 'reside' only in one place or be 'owned' by only one person. The reality is that the information is readily and instantaneously available to those within the group of eBay entities in a variety of places. It is irrelevant where the electronically stored information is located or who as among those entities, if any, by agreement or otherwise asserts 'ownership' of the information."

Legal experts say that could have implications for other businesses.

"Information concerning Canadian clients that can be accessed and used by an online commercial enterprise in Canada appears to be fair game regardless of where the information is stored or who asserts ownership over it," lawyers for the firm McCarthy Tétrault said in a recent article about the decision.