Taxing Clothing Sales in SL

In today's Toronto Globe & Mail newspaper, there is an article about the Canadian Revenue Agency (the Canadian equivalent of the IRS) going to court to force eBay to produce a list of the names, addresses, phone numbers and e-mail addresses of all high-volume sellers. The tax man wants his share.

Both Canadian residents and U.S. citizens are required to report their income to the income tax authorities, whether from employment or a home business. It doesn't matter to the tax man whether the money was earned in your first or second life.

There is an important distinction between eBay and Second Life however. According to the article, Canadians spend $1.25 billion on real products on eBay, much more than on virtual products on Second Life. However, if SL grows that large, watch out! The taxman will come knocking here as well, and will be just as unlikely to accept the argument that the information is stored on a server outside of its jurisdiction.