United States Taxation of Virtual World Economies: A Review of the Current Status

Jamie S. Switzer () and Ralph V. Switzer ()
Additional contact information
Jamie S. Switzer: Colorado State University
Ralph V. Switzer: Colorado State University

A chapter in Handbook on 3D3C Platforms, 2016, pp 85-101 from Springer

Abstract: Abstract The taxation of virtual world economies is uncharted terrain, one that both researchers and government officials are just beginning to scrutinize. Taxes are inevitable in any economy, but what about the increasingly lucrative virtual world economies? The market for virtual goods and services in the U.S. alone is estimated to be between $2.9 and $3.5 billion annually and is predicted to grow to $5 billion by 2016. So it is no wonder that governments are beginning to take notice. Experts are divided as to the feasibility of taxation of virtual economies. Most experts agree however that there is significant ambiguity in the current U.S. Internal Revenue Code with respect to virtual worlds. It is unclear if transactions occurring in a virtual world are taxable in the U.S., and the Internal Revenue Service has to date not offered any strong guidance regarding the issue. In this chapter, we argue that virtual transactions are already subject to taxation under current U.S. law, at any point in time that the U.S. Internal Revenue Service should decide to enforce the current law, whether taking place in game worlds or unscripted worlds. This would include virtual-to-virtual transactions as well as virtual-to-real transactions, as the issue at hand is whether or not virtual activity is taxable, regardless of realization, because all goods and services have a fair market value.

Keywords: Virtual World; Gross National Product; Online Gambling; Game World; Internal Revenue Service (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:prochp:978-3-319-22041-3_3

Ordering information: This item can be ordered from
http://www.springer.com/9783319220413

DOI: 10.1007/978-3-319-22041-3_3

Access Statistics for this chapter

More chapters in Progress in IS from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().