Should the IRS Tax Virtual Economies?

Maximum PC Staff

According to Taxpayer Advocate Nina Olson, the International Revenue Service should start taxing the economies of Second Life, World of Warcraft and other virtual worlds. In an annual report posted on the IRS website, Olsen has stated that there are a number of issues that the IRS should address before they get out of control.

"Economic activities associated with virtual worlds may present an emerging area of noncompliance, in part, because the IRS has not issued guidance about whether and how taxpayers should report such activities," Olson writes in her report. Alongside that, she identifies that almost all income is subject to taxation, even prizes and winnings.

This isn’t the first time this issue has been mentioned, though. Since 2003 people both on and offline have looked ad the taxation of virtual economies and Dan Miller, a senior economist for the congressional Joint Economic Committee, has started playing with the idea of taxing MMORPGs after he’d taken a step into online gaming.

With any luck, this won’t come full circle. It would be a huge burden on taxpayers, having to report their every move in World of Warcraft to Uncle Sam, but who would really want to get caught up in paperwork just to play a video game?

Image Credit: Blizzard Entertainment

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