Real-money economies are developing in virtual worlds such as Second Life and World of Warcraft (see several previous posts). In Second Life, for example, people trade digital goods (from clothing to tools to real estate) in "local" currency, Linden dollars, which can be converted into real US$, and some make good money this way. In a recent speech in Amsterdam, founder Philip Rosedale said that the overall SL economy is currently around US$ 75 million a year, growing fast. Researcher Ed Castronova estimates that overall real-money trade in synthetic worlds could already be worth US$ 1 billion.
The tax authorities are now taking an interest, according to Reuters (which is opening a virtual news bureau in Second Life, by the way). The US Congress has a Joint Economic Committee looking into "the various dimensions of virtual economies, and where they might intersect with public policy". Which is a way of saying that there will be soon tax-collector avatars.