| Mail |
You might also like: WoW Insider, Joystiq, and more

Reader Comments (31)

Posted: Jan 13th 2009 10:36AM (Unverified) said

  • 2 hearts
  • Report
This argument is so dumb.

They aren't going to tax your "sword of the uberpants". It's REAL money items.

Gold sellers? Taxed.
Gold Buyers? Taxed.
Accounts sold? Taxed.
Sell the gear you get for real money? Taxed.

Pay a sub (which are taxed in some cases) and play the game using the in-game economy, and no real money trades hands? NOT TAXED.

So, if you only play for fun, then no you won't be taxed. If you use the "virtual world" to produce or purchace in-game items (that are not for sale directly from the developers) you will be taxed. It makes perfect fucking sence.

It's the purchase and selling of goods for actual money... the goverment gets ther piece. Welcome to every other form of income ever. It's no different.

Posted: Jan 13th 2009 10:50AM (Unverified) said

  • 2 hearts
  • Report
You're thinking about income tax, which is only one of the overall class of capital taxes that are assessed and collected. Most of the other forms of capital taxes don't deal with money at all. Shares in a company are taxable, some cars, some furniture, your house, your yacht, your Tang Dynasty vase, and so on - even if you never convert them to cash.

Posted: Jan 13th 2009 1:11PM (Unverified) said

  • 2 hearts
  • Report
If you make real world money off of virtual items, you should be taxed. This IRS document does not cover virtual assests....just virtual assets that you buy with RL money.

This covers any item in a place like SL (since there is a US dollar value for Linden whatevers) and in a microtransaction enviroment where there is a conversion rate for real vs virtual money. It does NOT cover items that have no RL value...such as items in World of Warcraft...because you do not pay cash for those items.

Subscriptions to Wow, Character transfers...those things however, things you pay cash for, definately can be taxed.
Reply

Posted: Jan 13th 2009 11:09AM (Unverified) said

  • 2 hearts
  • Report
Yes, but those are all real items, and their real money vlaue increases, and they also add real equity to your over-all fortune.

Somone that plays for fun could only have their sub taxed (which some do) b/c everything that happens in-game does not do any of the previous.

UNLESS you are making money through it. In which case you should be taxed.

It's very black-n-white, and the gaming community is trying to paint it another color.

Posted: Jan 13th 2009 11:12AM (Unverified) said

  • 2 hearts
  • Report
I would love to see a gold farming group be brought up on charges of tax evasion. :)

Posted: Jan 13th 2009 11:14AM (Unverified) said

  • 2 hearts
  • Report
You should take a good read through the report and read what *they* said. We've just summarized it here. There's no substitute for the IRS in their own words.

Posted: Jan 13th 2009 11:28AM (Unverified) said

  • 2 hearts
  • Report
Considering the IRS report is well over 300 pages... I doubt I'll be reading it any time soon.

So if I buy gold from a gold farmer, then I lose that gold in a PvP fight... can I claim a theft loss on my taxes? :)

Posted: Jan 13th 2009 11:32AM (Unverified) said

  • 2 hearts
  • Report
The relevant section is only 14 pages long, and quite on-target. And no you can't in most circumstances (they actually do cover such capital loss situations).

Posted: Jan 13th 2009 11:45AM (Unverified) said

  • 2 hearts
  • Report
I actually find it amusing that people so often claim that they're immune from getting taxed by governments when they engage in *any* kind of economy ;)

Then again, I guess it's a cultural thingy. I'm used to get taxed for everything that I consider having value for *myself*. On the other hand, *expenses* made in SL on behalf of myself (as a freelancer) or my company for a project, are most certainly liable to be placed as "costs" on my balance sheet, thus reducing the amount of income taxes ;)

So, sure, I might we liable to pay VAT on buying L$ on the LindeX, but I can then claim I used those L$ to make purchases to deploy some project of mine and reduce the overall income taxes that way ;)

It works both ways, not just towards the Government's coffers ;)

Posted: Jan 13th 2009 11:52AM (Unverified) said

  • 2 hearts
  • Report
I am an accountant. I fully understand that if these virtual items/gold are sold for real-world money, that transaction is taxable.

However, to say that winning 50 virtual silver pieces from a virtual slot machine in a virtual world is a taxable event that must be disclosed on a 1099 is absolutely ludicrous!

Posted: Jan 13th 2009 12:06PM (Unverified) said

  • 2 hearts
  • Report
I'm not concerned...I've poured so much money into the SL economy over the past 2 years that any little bits of money I *did* earn (selling music changers, DJ tips, etc.) are basically "lost in the noise." Of course, I don't have "receipts" to prove any of this...

Posted: Jan 13th 2009 1:52PM (Unverified) said

  • 2 hearts
  • Report
Gwyneth Llewelyn, well said! Thank you :)

Posted: Jan 13th 2009 1:29PM (Unverified) said

  • 2 hearts
  • Report
Interesting report. It looks like that in this case, the IRS's ability to tax is derived from the fact that virtual goods CAN be exchanged for something of real value. Like it or not, a real-world value has been placed on on stuff we only ever find in-game, whether its gold, weapons, armor, or the like. People are willing to pay real money for those things, thus they now have *real* value.

So, when something that inherently possesses *real* value is exchanged for something else that possesses *real* value (whether you're buying gold or you're playing the auction house in WOW), you're essentially conducting a taxable transaction. The fact that I'm paying you 10 gold for a stack of Frostweave cloth is irrelevant - I'm trading something with real value (gold - worth $$) for something else with real value (Frostweave cloth - worth 10 gold), and thus, could possibly be a taxable barter transaction.

I realize how ridiculous that sounds, and I'm scoffing at the possibility of Blizzard ever sending me a 1099-B on all the "income" I made from my auction house dealings. However, as it stands now, the law is ambiguous at best, and at worst, already does require taxation of transactions we conduct in-game.

Posted: Jan 13th 2009 1:49PM (Unverified) said

  • 2 hearts
  • Report
There are many questions concerning this though. I spend/lose a lot of money each month with my in-world business. Can I consider that as a capitol loss? How do i differentiate L$ received from people outside of my country? Do I get taxed how much L$ I sell, or do I get taxed on how much US$ I pull out of SL? I often sell L$ to help pay towards my tier. Would I be taxed on the sale of L$, or just if I pull US$ out from those sales into my "real" bank account. What if I buy 100 US$ of lindens, then sell the lindens, and then get the US$ transferred back. It's all "my money" rite? Can I claim children in SL as my dependents (j/k).

Posted: Jan 13th 2009 2:02PM (Unverified) said

  • 2 hearts
  • Report
I read through those 14 pages in that report and I get the feeling that this more or less is an attempt to get Congress to spend some time to clarify the rules regarding virtual world transactions and to a lesser extent, whether most of them are even taxable at all. It has been a growing source of anxiety for anyone like us that participate in any Virtual World or online game and they are saying the rules regarding this area need to be put on paper so that we as taxpayers can make sense of it, and if need be, have the IRS set up a system to monitor online transactions of significance.

I have a feeling that if they do put a tax on something like WoW gold, it could easily be rectified by giving the IRS its own WoW account that has a character on every US server that automatically receives a small amount of gold every time a character performs a taxable action. Then the US government would realize how completely pointless taxing in game virtual transactions is, and maybe begin to understand the stance of game companies against gold sellers. That or the US government would become the single largest gold seller in the world...

Posted: Jan 13th 2009 7:21PM (Unverified) said

  • 2 hearts
  • Report
Pretty much. This report after all is written by the advocates for the US Taxpayers. Thus, they favor sense and simplicity. They'd *like* to get Congress to rule out a lot of the arduous or daft applications of the code.

Makes me wonder if everyone's congressional rep got through the 14 pages.
Reply

Posted: Jan 13th 2009 4:24PM (Unverified) said

  • 2 hearts
  • Report
Yanno, this could be a real slam against gold sellers in games like WoW where the developer tries to crack down on in game items having real value (unlike Second Life...where the company even has an exchange rate for US dollars and, in their mission statement, has a dual purpose of being a social gathering place and a virtual marketplace). Gold sellers would be commiting fraud, rather than simply violating a TOS.

Posted: Jan 13th 2009 4:39PM (Unverified) said

  • 2 hearts
  • Report
I'd love to see Gold Sellers hit the hardest. It'd be nice if they ended up having close shop and some of that padded "11 million subs" crap would stop.
Reply

Posted: Jan 14th 2009 12:55AM (Unverified) said

  • 2 hearts
  • Report
Although it might be against a TOS, legally there is nothing wrong with selling gold as long as you declare your income. I'm sure most "gold" sellers have been declaring their income for years...
Reply

Posted: Jan 13th 2009 3:20PM jpo said

  • 2 hearts
  • Report
Heh....I'm not worried about this at all.

All my characters are so freekin' poor the IRS is going to owe them a refund.

Featured Stories

Engadget

Engadget

Joystiq

Joystiq

WoW Insider

WoW

TUAW

TUAW