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I am Canadian and live in Canada. I have an online business and customers pay me through PayPal in USD. My sales are transferred from PayPal to a USD account I hold with a US Bank in the U.S.From there,these funds are transferred into a USD account I hold in Canada. I write a cheque to do this. (PayPal will not deposit USD funds into a Canadian USD account.) My questions are

  1. Since PayPal is an American company, do I pay U.S. tax on my sales even though I live in Canada and am Canadian? and

  2. Are there IRS implications of having my sales deposited into a USD account in the U.S?

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Since PayPal is an American company, do I pay U.S. tax on my sales even though I live in Canada and am Canadian?

No relation whatsoever.

Are there IRS implications of having my sales deposited into a USD account in the U.S?

Not in particular, but you might be asked to explain the source of the funds and why you're not filing tax returns. Unless the money is sourced to the US, it shouldn't be taxable by the US.

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