Chase Oxygen

Thanks for your response! You are making more sense than the accountant I'm employing lol The problem is the state I live in doesn't have state income tax and they are wanting to categorize these earnings somehow on a state level...retail sales tax seems to be what they are trying to push...but as you said how would that apply on virtual products by unknown identities and location. The digital content and service isn't even hosted or owned by me and a very small percentage of the sales would come from this state, if you were to even attempt to look at it that way. I don't know how people with businesses are filing this stuff...it's a nightmare!

Hi Just thought I would throw this question out there and see if anyone can shed any light on the matter. Income derived from Second Life is subject to Federal income tax but what about State taxes? If you operate as a business or sole proprietor in a different state to California (to where LL is located) what other taxes could your SL income be subject to (other than business operating taxes)...does retail tax come into play (althought this would be difficult to calculate because the sale happened outside your state) Any ideas? Cheers!