Walking the Thirteenth Floor: The Taxation of Virtual Economies

Abstract

The IRS began efforts to address taxation of virtual economies in 2007, culminating in minor steps to effect compliance and a report by the Government Accountability Office released in May of 2013. This Article contends that the IRS is losing valuable tax revenue from sales of virtual goods for real money due to a lack of effective guidance in traversing this new frontier. And so, this Article establishes a spectrum of gamer profiles (social, vocational, casual, casual-hardcore, and hardcore) and uses that framework to craft tax compliance strategies in each virtual economy archetype.