Careful, the IRS is Using Social Networks to Find Tax Evaders

Andy Salisbury — Tue, 01 Sep 2009 17:04:14 -0500

Thanks to the inherent irresponsibility that comes with singing up for any social network, the IRS has been tracking down tax evaders thanks to people’s Facebook, MySpace and Twitter habits.

Mining through posted information such as relocation announcements, professional profiles and financial gains, agents with the IRS have been able to collect all sorts of bucks from would-be tax dodgers. One Nebraska agent was able to collect $2,000 from a disc jockey after he advertised on MySpace that he’d be working at a big public party. “These new supplements are often far more efficient than the older ones, such as reading the local newspaper or making inquiries at barbershops and church meetings,” said Jim Eads, director of the Federation of Tax Administrators. Another agent was able to collect $30,000 of unpaid taxes after a Google search lead him directly to his target.

So, if you’re the type of person that likes to boast about income that hasn’t been reported on Twitter, think twice. The IRS could be, and probably is, watching.

Image Credit: Getty Images

Should the IRS Tax Virtual Economies?

Andy Salisbury — Mon, 12 Jan 2009 16:09:15 -0600

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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Careful, the IRS is Using Social Networks to Find Tax Evaders

Should the IRS Tax Virtual Economies?