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Real-world Taxes in MMO's a possibility
admriker4
Member Posts: 1,070
edited, added new links and posted here since several posters clearly didnt read additional posts beynd this one...
The IRS is taking a good hard look at the MMO industry. They see games like Second Life and World of Warcraft where massive profits are possible. Because of this, the IRS is actually considering potential taxes based on MMO items / currency.
Lets say you loot an epic sword. That sword has an estimated value of $50 dollars based on an average of sales on e-bay. Think of it like a car, with an established value you could potentially owe actual Taxes for that sword ! Looting epics might become expensive.
Even if you never sell that sword, it still has value and therefore counts as a gain. You would owe taxes based on its real-world value
Gold you loot certainly has real-world value. Its just like foreign currency conversion. The IRS could tax your gold using a conversion based on what it could sell / convert to dollars.
This is the inherent danger gold farmers have established for us. They have shown virtual items have real-world value.
Kinda scary to think Id have to pay taxes on gold I earned for that week from questing or some item I looted.
Because the economy is so bad right now the IRS has really started to consider this potential income as taxable again. (theyve been considering this since 2005)
http://www.gamespot.com/news/6162654.html
http://news.cnet.com/2100-1043_3-6140298.html
An accountant I know told me he took a weekend seminar course and this subject was mentioned. There is real talk going on right now about how to implement this tax
added this...
well I got quite a few posts saying to basically ignore this subject simply because the links provided were old. Below is one from 2009.
I also was told that they would never consider taxing items or other virtual property in MMO's. Guess what, they are looking at that as I told you all. Theyre considering a capitol gains tax on virtual items.
I was also told by posters that you cant tax virtual good if the developer doesnt permit exchanges. That was also wrong.
Primarily if virtual goods / land and / or virtual currencies can be exchanged for some other taxable medium, then they themselves are taxable (whether or not the operator of the virtual environment or MMOG actually permits that exchange as a part of their terms-of-service).
Many countries (such as Australia and the USA) can and do tax barter transactions (the exchange of one type of goods and/or services for another type), but usually no reporting of such transactions is required if they are assessable in value at less than one dollar.
In some cases, however, many sub-threshold transactions may take place, or a non-corporeal item may appreciate significantly in value (virtual land, for example, or shares in a company, or simply the steady accumulation of game-currency that could be exchanged for US dollars). In those cases, Capital Gains Tax kicks in, and the difference in value of corporeal and incorporeal assets are assessed over a period of time, and tax is applied to the difference.
http://www.massively.com/2009/01/13/irs-reports-to-congress-virtual-worlds-mmogs-have-always-been-t/
Comments
Couldn't happen based on the fact that selling items in WoW and most other games is illegal. You won't be taxed on something that doesn't have a legal value.
Looking for a new game to play
The game companies can squelch that real quick. Anything in a game is the game developers property. The ones making money buying/selling virtual property are selling the developers property, not the account holder. You are only "renting" the right to use the items while subscribing and playing the game.
So unless the I.R.S. plans to start taxing sales of stolen goods ( which they can't ), there's no danger.
Yeah, its the same arguement with selling items. You never actaully own it, (hyperthetical) If Blizzard were to shut down all WoW servers and burn all the data, they could, it is their stuff. You don't actually own anything.
Second Life on the other hand HAS a direct value of ingame money for Real money and it is part of the program for any participant to make money and there would be real problems if Second Life tried to shut everything down as they themselves have placed a price on virtual items.
You forget that developers are now selling in-game items (RMT).
Developers along with gold farmers have established that virtual items have real-world value. The IRS knows this and therefore is working on a means to tax it.
Its not a question of if now but rather when this will happen.
My accountant friend mentioned another reason as well. Players are starting to use MMO's as a means to earn money like a tax shelter. Player A buys a space station in Project Entropia for 100,000 dollars. He resells that virtual property for 200,000 a year later. Net profit 100,000 which should be taxable whether he converts it back to real-world currency or not.
Turbine offers items for sale in their MMO's. The IRS says thats a gain, whether the item physically exists or not and therefore should be subject to a sales tax. The player resells the item for a profit, that profit is also considered a gain and subject to taxes.
The idea here is that virtual items have real-world value. And since its been established now that virtual items can in fact convert to physical money they can and will be taxed.
I dont like it anymore than the next person but it seems inevitable taxes are coming to MMO's
the government will do anything to scam more money out of it's people... isn't that why we broke away from England "Taxation w/out representation"?
the government will do anything to scam more money out of it's people... isn't that why we broke away from England "Taxation w/out representation"?
The difference is, now we have representation to screw us over, where as before we were screwed over unrepresented.
I jest I jest.
But I don't see the taxation of ingame items unless they are actually bought from an RMT store, but even then, you don't have to pay taxes on stuff you buy over the internet from another state, so I don't see this happening.
Tried: LotR, CoH, AoC, WAR, Jumpgate Classic
Played: SWG, Guild Wars, WoW
Playing: Eve Online, Counter-strike
Loved: Star Wars Galaxies
Waiting for: Earthrise, Guild Wars 2, anything sandbox.
The IRS regularly gets convictions for drug traffickers. Allthough the money a drug dealer gains is from illegal means, he still is required to pay taxes on it. Watch Scarface for example, the main character was facing prison time for failing to pay taxes on money he gained from drug sales.
Whether Blizzard or other developers wish to admit it, MMO items / gold have value and therefore can be taxed. It doesnt matter if the items are "stolen" based on that developer's opinion. It doesnt matter if the item physically exists. A gain is a gain.
This isnt my opinion, read the links. google mmo taxes and you'll see this is coming.
the government will do anything to scam more money out of it's people... isn't that why we broke away from England "Taxation w/out representation"?
The difference is, now we have representation to screw us over, where as before we were screwed over unrepresented.
I jest I jest.
But I don't see the taxation of ingame items unless they are actually bought from an RMT store, but even then, you don't have to pay taxes on stuff you buy over the internet from another state, so I don't see this happening.
This is big business. 500+ million dollars a year is profitted for items that dont actually exist. You can bet the IRS wants a slice of that money.
And this isnt my opinion. The IRS is seriously looking into this revenue stream.
http://www.gamepolitics.com/2008/08/24/report-gold-farming-500-million-industry
MMO publishers adding RMT to games opens this door.
the government will do anything to scam more money out of it's people... isn't that why we broke away from England "Taxation w/out representation"?
Not to go off-topic in my own thread but take a look at my quote under my avatar. We didnt break away from England because of taxes like the elite-run education system has taught you to believe.
We revolted because the Bank of London owned by the Rothschild family wanted control of our money. The american colonists were using colonial script that was interest-debt free. While England labored in debt, poverty, and inflation the colonies prospered. When London's bank learned that colonies were issuing their own currency debt-free they went on the attack. Taxes was just one weapon they used against america.
Ironically america eventually lost the revolutionary war. In 1913 the Rothschilds eventually got control of america's currency with the establishment of the Federal Reserve.
I wouldn't consider it unreasonable for taxes to be introduced when in-game items are sold for RMT; i.e. part of the profit of the sale went to taxes. It would, (of course) mean higher prices in items shops as MMO companies would almost certainly pass on at least part of the tax bill to the purchaser.
just can't see the time coming whereby we loot 1000 gold and get a bill to pay like £20 to the tax man though.
Playing: EVE, Final Fantasy 13, Uncharted 2, Need for Speed: Shift
Well, if it happens all i can say is good job to the cockroaches who rmt ( both the sellers and buyers) and see ya. 'Cause I'll be playing singleplayer games from then on.
How can they tax us, the users, with things that we do not own? It clearly says in the EULA of most MMO's that we do not own accounts, characters or items.
|Mortal Online|Gnostaria|
can you imagine being in a raid and an epic drops. "roll if you want item" "one sec, looking up how much taxes I'll owe for that item"
Like someone else here posted, devs are further opening this pandora box by RMT
Ads, taxes, microtransactions...all good reasons why I will quit playing mmos eventually and just start reading good books again.
Actually, services can be VAT'ted and already are. So taxing RMT isn't that remote possibility at all.
Playing: AC2
Played: UO, DaoC, Horizons, Ryzom, WAR, LotRO, Eve, VG...
Also, the minute taxation becomes viable, no company will have the right to tell the goldfarming, item selling, and item buying dickwads thatthey are banned. The mmo dev will essentially lose any and all rights to what happens with their game.
See how long Blizzard keeps WoW up when that happens, much less any other gaming company with a much smaller budget for hiring extra CPAs, tax attorneys, and whatnot.
MMORPGS will be dead in less than a year except for the cyborz loving bottom dwellers in games like Second Life and Entropia universe.
eula has no legal weight honestly. Anyone can make you sign their EULA but that doesnt make it legal or have merit.
drug profits arent legal but the IRS can still come after you for failure to pay taxes on it. Thats why drug traffickers will set up bogus companies to allow them to pay taxes from their gains.
It doesnt matter if Blizz considers virtual items in their MMO their property, it still has real-world value. If a player can make actual money from selling gold or items in WoW it constitutes a gain.
Then you have developers like SOE who promote the idea that virtual items have real value simply because they sell them. This further establishes the fact that virtual items are worth real money.
What this means for us is possible sales taxes for RMT and taxes on any profits we make from virtual world items
As long as the said companies do not endorse RMT I'd say they are safe, but instead of just reporting the spammer to GM's I can report their websites to the authorities with enough resources to give hell to tax avoiders. Blizzard will lose lot's of accounts tho' :P
Playing: AC2
Played: UO, DaoC, Horizons, Ryzom, WAR, LotRO, Eve, VG...
These two I could imagine are entirely possible..
They could tax the company who were operating an item-shop, as they were making a profit from virtual sales.
They could tax the player who sells a virtual item for real world currency, as they were making a profit from virtual sales.
But I don't think they'd be able to get away with taxing us on using in-game currency to purchase virtual items; unless they also made it possible to convert in-game currency to real-world currency which would lend an interesting element to MMO gaming.
Short of cash this week? .. do a bit of grinding then cash it in and pop off to the pub!
Edit: Though of course the crazy gold-farming industry would no doubt skew the b'jeezus out of the conversion rate by paying their workers 3p a day or something.
Playing: EVE, Final Fantasy 13, Uncharted 2, Need for Speed: Shift
Actually, services can be VAT'ted and already are. So taxing RMT isn't that remote possibility at all.
Good point. I wouldn't be surprised if the IRS (or other tax enforcers) could somehow make this come through
I do wonder if I will end up paying tax to the US, even if I live in Europe, or if I should pay a tax to the EU or my own country. What nations tax rules would count and for who?
Ah, well, we will see. Perhaps Blizzard can pay for some heavy lobbyists to make sure it won't come through in the US
To the OP, thanks for the links and for bringing this one up again. Interesting as usual.
Taxes on the sales from RMT I can see, but not on the virtual items themselves (ie. considering them property).
Ico
Oh, cruel fate, to be thusly boned. Ask not for whom the bone bones. It bones for thee.
I have a friend in the MMO industry. According to him this topic has been discussed. One idea tossed about was developers would take gold / currency out of the games. Bartering would be reduced by making items bind on pickup. But in the end developers realize that there is profit to be made for virtual items so they likely will all accept RMT and pass the sales taxes onto us.
MMO's are supposed to be a fantasy escape from reality for us. But MMO's like Second Life and Project Entropia have created virtual worlds where profits are possible. And gold farmers have proven items / gold in games like WoW are immensely valuable
If anything, I'd expect to see energy taxes added in to subscriptions and microtransactions for things like power consumption.
~Ripper
there hasnt been any stories written recently but that doesnt make the story less true. And I brought this topic up because accountants are discussing and planning for the possiblity of this.
read the articles, they state this isnt just a possibility its going to happen...just a matter of when, not if.
And you certainly could be required to pay a tax on a looted sword. Its no different than winning a car on a gameshow. You aquire an award that has value, you must pay taxes based on its worth. And this isnt my opinion, this is what the IRS, accountants, etc are stating