The Tax Challenges of the Digital Economy

The digital age has made many things easier. Everything from checking a bank account, checking your stock values and finding a new financial institution can be accomplished with the click of a button. Even filing taxes is easier in the digital age. However, the nature of the digital age has made a few things a bit harder. Here are some tax challenges that are currently underway because of the digital economy.DigitalComputers

Digital Currency

With the inception of the internet came internet currency. Bitcoin is one of the big ones. Some people will make money and make purchases in bitcoin as opposed to traditional currency. It can be difficult, and sometimes impossible to track bitcoin earnings. It can be even harder to determine the proper exchange rate and how much should be declared on taxes.

Additional Risk of Fraud

With filing taxes online comes the worry that someone will have access to personal information. It also means that people may feel bolder about attempting to collect refunds that they are not owed. With many huge industries seeing hacking into personal customer information, there has come a worry about the possibility of major identity theft for those who file taxes. This presents an issue for the IRS and for citizens themselves.

Software Issues Causing Mistakes

When you are filling out forms online, there is always the possibility that something will malfunction or not go through appropriately. When this happens, the return process is slowed, causing hold ups in the system. Though filing taxes online is faster than mailing them in, when a mistake happens, it can affect a wide number of customers, leading to a digital jam that needs to be cleared.

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About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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