The Legal Risks of Tax Evasion in the Digital Age

By Martin de la Fuente

With the rise of Venmo, PayPal, and digital wallets, millions of dollars can move around the world in a matter of seconds. But as fast as financial technology is advancing in society, so are the tactics used to evade taxes. Tax evasion is a transnational issue that individuals attempt to do, to save money. It has been a particularly growing issue amongst content creators, online sellers and even investors. As a result, many countries are strengthening their laws regarding taxes, to ensure every citizen pays the obligated fixed amount.

Tax evasion can be committed by hiding income or falsely stating their income to the government. Platforms like Etsy, Binance and other online platforms, are misleading individuals into thinking that they don't have to report that money as income to the government, leading to legal consequences because of the attempted tax evasion. This is a deeply rooted issue in society that is costing governments millions and having multiple negative effects. Those caught committing tax evasion can face heavy fines or even jail time in extreme cases, depending on the country's national laws. For example, in the US, tax evasion can result in up to 5 years in prison, regardless of if it was unintentional or intentional, due to the lack of honesty shown to the US Government.

The US now requires online platforms where money can be made and transferred such as Pay Pal and Ebay, to report any income over 600$. This implementation of tight rules will lead to the decrease in individuals committing tax evasion due to its controlled activity within online platforms. However, it's important to state that there is a difference between legal tax avoidance such as when businesses use tax free investment accounts, with the act of purposely evading taxes by hiding income on tax forms presented by the government.

In today's fast moving digital society, understanding and respecting tax laws around the world is extremely important. As financial platforms evolve and rise, so must our awareness of legal responsibilities we have and must follow, such as reporting the income you've made to the country's government to avoid any consequences. Tax evasion may seem simple to get away with, but laws are strengthening and becoming stricter across the globe. Clear regulations are being set to ensure that people are staying informed on the best way to avoid any legal issues and become more financially responsible.

MLA Citations

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‌“Understanding Your Form 1099-K | Internal Revenue Service.” Irs.gov, 2017, www.irs.gov/businesses/understanding-your-form-1099-k. Accessed 23 May 2025.

‌“Social Media: The Taxation of Influencers and Content Creators.” Tax Adviser, 22 Aug. 2024, www.taxadvisermagazine.com/article/social-media-taxation-influencers-and-content-creators?utm_source=chatgpt.com. Accessed 23 May 2025.