If it wasnt for the mass success of WOW and everyone and thier mother on the planet jumping on the WOW wagon. This would never have been thought of. Wow is where the money is at and thats where everyone is pulling in a bundle, from farmers to casual account sellers. So you could say that the extreme success of Disney World WOW is killing the MMO genre.
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Frankly, I just do not see it possibly affecting anyone who plays MMOs but never touches RMTs. You have a clear rental relationship with the game company so as long as you return all the rented virtual property back to them when you stop playing you are int eh clear. A renter is not taxed because the property they are renting gained in value.
Will never happen. Do you know anything about tangible and intangible assets? Those in game items are intangible assets. You own them, but you can not physically touch them. If they want to tax on something like that, they would have to tax your character.. and thats just bologna
______________________________
What if Paul Revere was like the boy who cried wolf....?
Originally posted by Hazmal
What does he say when people ask what he did? "My mommy was irking me yo - I wanted to keep pwning nubs on my xbox, so I roughed her up with a hardshell. That is just how I roll."
These articles are from 2006. Pleas cite more current sources or else this entire thread is moot. The IRS already has the right to collect taxes on items that a player converts to cash (E-Bayed characters, gold selling, etc...), because those activities generate income. Virtual items only have real world monetary value if somebody charges for them. In the case of iegitimate sales, the individual or company who earns revenue from the sales of such items will be the ones being taxed (companies with authorized RMT, for example). in the case of illegitimate sales (black market gold farming, character selling, etc...), the individual who receives money for selling the item is responsible for paying income taxes, whether the sale was legal or not. You'll never, ever be taxed simply for looting an item that might have real world value. This would be akin to being subjected to income tax/gaines taxes on Superbowl tickets you purchased, just because somebody would be willing to pay thousands more for scalped tickets.
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
It does make the story less valid. If there was any weight behind this, we'd have heard more about it in the last two years. The IRS already requires taxes on income. If you receive income from the sale of virtual goods, you are responsible for paying taxes on that income. That's what accountants are learning about, not the taxation of goods that have pontential real world market value, but haven't ever changed hands. If if that ever came to be (and it never will), market value would need to be established for literally ever single item that could possible be sold (whether it is sold or not) in order to establish taxation rates. Regardless, the value of any one item, either perceived or real, is largely based on convenience. If I were to sell an item for $100 could I get a tax break by deducting the number of hours it took me to get the item? What if getting the item required a group effort?
Simply put, once again, this will never, ever happen.
Never underestimate the ability and willingness of politicians to impose crippling taxes on things that they don't like. See, for example, tobacco in America, or gasoline in much of Europe, where most of the cost of what you buy is tax.
It's really just a matter of time before some politician decides that playing computer games is bad, and so he wants to heavily tax them to discourage people from playing the games. (I mean here a tax specific to computer games, as opposed to more general sales taxes that apply to a broad variety of goods and services.) The tax won't start out very high, of course, but if he gets away with it, it won't take too long before you're paying a $50/month tax on a $15/month game subscription.
If the first few politicians to try that go down in flames at the next election, that would make the issue radioactive, so others won't try it. There isn't anything politicians understand better than preserving their re-election chances.
Never underestimate the ability and willingness of politicians to impose crippling taxes on things that they don't like. See, for example, tobacco in America, or gasoline in much of Europe, where most of the cost of what you buy is tax. It's really just a matter of time before some politician decides that playing computer games is bad, and so he wants to heavily tax them to discourage people from playing the games. (I mean here a tax specific to computer games, as opposed to more general sales taxes that apply to a broad variety of goods and services.) The tax won't start out very high, of course, but if he gets away with it, it won't take too long before you're paying a $50/month tax on a $15/month game subscription. If the first few politicians to try that go down in flames at the next election, that would make the issue radioactive, so others won't try it. There isn't anything politicians understand better than preserving their re-election chances.
The U.S. Congress is actually looking into the taxability of Mighty Rage Potion and Shrouds of Provocation.
The issue of taxing virtual assets is a complicated one, but the primary point of justification offered by many economists, even if they're only talking "in theory," is the fact that these virtual assets have an established real-world value. When gamers started selling their virtual armor and horses and castles for real-world cash, which began long before Dibbell wrote a great story about the extended tax implications of those sales, they established an exchange rate. For instance, since we know what a suit of armor sells for in Everquest or World of Warcraft gold, and we know what the same type of suit of armor sells for on eBay in U.S. dollars, we have a way to establish the an exchange rate between game dollars and U.S. dollars. And theoretically speaking, for tax purposes, anything that has a real dollar value is taxable once it changes hands. So if you sell a suit of armor to another player for a certain amount of gold, it's possible for the IRS to tax that transaction as income earned in the converted U.S. dollar amount of that gold
As you see here, the US goverment is actually pondering the question can they tax you for selling items in-game for the gold you earn.
OMG they want to tax us…kill all US Government officials!
This is even better than the SOE nonsense, here the Evil US government has not even done anything yet it seems we need a drama thread. You do realise how many studies by governments end up in a waste bin?
Maybe they will put plans in motion to tax us, if so it than becomes an issue, not now.
OMG they want to tax us…kill all US Government officials!
This is even better than the SOE nonsense, here the Evil US government has not even done anything yet it seems we need a drama thread. You do realise how many studies by governments end up in a waste bin?
Maybe they will put plans in motion to tax us, if so it than becomes an issue, not now.
My point is that virtual items are being considered potentially taxable. And income earned is certainly taxable. Gold sellers in China are now being taxed at a rate of 20%.
I can google, too. Linking the article on Chinese taxations is pointless, since it's explicitly for income earned from selling virtual goods. The US already requires income reporting, as I've already mentioned. The other article is from 2006 and is largely theoretical in nature.
This entire topic is old news, alarmist and borderline trolling.
BTW - here are some other articles, none of which state that the taxation of non-monetized virtual goods are inevitable. instead, you'll notice that the focus is on monetized transactions (within an environment like Second LIfe), rather than imputed income and also on criminal activity, such as money laundering within a virtual environment
Fine then, let them tax me. For their info here's my inventory:
0 Gold
A couple of stupid seeds
A small pile of goup
Unless they want to invest more money to get the data off the servers of major MMORPGs and sift through it matching the account names to character names to inventories to items and then to credit cards and finally names and addresses. And what if the person puts in fake info and uses a game time card form Wal-Mart? Totally infeasible idea.
____________________________ Telthalion Rohircil - Guardian - Elemandir - Lord of The Rings Online --- == RIP == Torey - Commando - Orion - Tabula Rasa == RIP == --- Jordaniel Torey - Navy Megathron, Active Armor Tank - Tranquility - EVE Online --- Torey Scott - Rifleman - Fallen Earth ____________________________
"I know not with what weapons World War III will be fought, but I know World War IV will be fought with sticks and stones." - Albert Einstein
Fine then, let them tax me. For their info here's my inventory: 0 Gold A couple of stupid seeds A small pile of goup Unless they want to invest more money to get the data off the servers of major MMORPGs and sift through it matching the account names to character names to inventories to items and then to credit cards and finally names and addresses. And what if the person puts in fake info and uses a game time card form Wal-Mart? Totally infeasible idea.
Do not tempt politicians with the prospect of having more money to spend on their favorite stupid projects if they can find ways around that.
For example, the tax could be required to pay your next month's subscription, so that in order to continue playing, you need to pay not merely the basic subscription fee, but also whatever tax the government decides to charge on the present state of your character.
accountants are discussing this now which is why I brought this issue up to begin with. And so what if the news articles are 2 yrs old. That doesnt mean the issue went away and was forgotten about. Goverments take years to move on an issue. Only a fool would think this is going away or already forgotten.
I suspect those dismissing this and using the lame excuse "well its old news" are fearful of what would happen to their MMO's if this happens.
Like the article said, its not a matter of if but when this happens. Goverments tax money that doesnt exist now, its called digits on a bank's computer. In fact the majority of money doesnt actually exist in physical form these days. They are merely electronic transactions now. Is it really such a leap to think a govt wouldnt come after a virtual world currency profits ?
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
Yes it does open pandora's box, effectively WoW is a giant casino and subject gambling laws if this happens.
Fine then, let them tax me. For their info here's my inventory: 0 Gold A couple of stupid seeds A small pile of goup Unless they want to invest more money to get the data off the servers of major MMORPGs and sift through it matching the account names to character names to inventories to items and then to credit cards and finally names and addresses. And what if the person puts in fake info and uses a game time card form Wal-Mart? Totally infeasible idea.
Do not tempt politicians with the prospect of having more money to spend on their favorite stupid projects if they can find ways around that.
For example, the tax could be required to pay your next month's subscription, so that in order to continue playing, you need to pay not merely the basic subscription fee, but also whatever tax the government decides to charge on the present state of your character.
Some states have been taxing WoW subs for a while now. Seems to just be WoW, as I wasn't taxed on FFXI. I just so happen to live in WA state . This is from the WoW forums:
Players in select states around the U.S. have found that their monthly subscription fee is slightly higher than expected. With the rise of many online subscription-based services, several states have begun to apply a tax to services that use such a model, and this tax is an additional cost that players are seeing added onto the base subscription rate.
Specifically, residents of the following states will be charged this tax:
Illinois
Massachusetts
New Mexico
New York
Texas
Washington
Playing - FFXIV, ESO Played - FFXI, WoW, Lineage 2, Guild Wars, Aion, SWToR, LotRO, GW2, TERA, Rift, ArcheAge, TSW
Taxiing etheral items huh? Something that does not really exist? Unless the IRS can convince Congress to add a law that allows that, it is not going to happen. They most certainly can't do it under the existing laws. They would get laughed out of the courtroom.
Now someone making real income from a game, they have to report it. I am sure lots of people don't, but it is taxable income.
But getting the sword of ultimate whatever in a game wil never ever be taxable unless you trade it for real income.
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
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 seem to remember a Declaration of Indpendence that listed ALL of our problems with England, those taxes did piss us off just look at what Boston did.
Anyways I don't think this will happen in games such as LOTRO and WoW that don't do RMT. I could see this done in RMT but as lon as it is against the EULA to do RMT it shouldn't be taxable.
Hold on Snow Leopard, imma let you finish, but Windows had one of the best operating systems of all time.
If the Powerball lottery was like Lotro, nobody would win for 2 years, and then everyone in Nebraska would win on the same day. And then Nebraska would get nerfed.-pinkwood lotro fourms
AMD 4800 2.4ghz-3GB RAM 533mhz-EVGA 9500GT 512mb-320gb HD
Taxiing etheral items huh? Something that does not really exist? Unless the IRS can convince Congress to add a law that allows that, it is not going to happen. They most certainly can't do it under the existing laws. They would get laughed out of the courtroom. Now someone making real income from a game, they have to report it. I am sure lots of people don't, but it is taxable income. But getting the sword of ultimate whatever in a game wil never ever be taxable unless you trade it for real income.
Thats just it right there. You said "unless you trade it for real income"
The fact that x item can be traded for real value gives it a value. If x item sells for an average of 5,000 gold and that same 5k gold can be exchanged for 100 dollars, therefore x item = 100 dollars. Theoretically aquiring x item could mean you owe taxes on 100 dollars.
Its no different than winning a car on a tv gameshow. x car sells for 10,000 dollars therefore you owe sales tax on 10,000.
The only difference is the car actually exists and the x item is virtual.
However here is the real kicker....
By selling items and gold in-game (RMT), developers have legitimized virtual items as having real-world value. The item might not physically exist but nonetheless you own a small piece of gaming code with a real value. And anything gained that has real value is subject to a sales tax.
And if you can buy a virtual item and owe a sales tax on it. You certainly could owe that same sales tax on x item you loot as well. After all, it has real world value.
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
I'm not even sure I can take any of these links you have given seriously when they are spouting oxymoronic "facts" like,
"That's because game publishers may well in the not-too-distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual-world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons, or Second Life currency, even when those players don't convert the assets into cash."
If the IRS form 1099 is for INCOME (and according to their own form it is $400+ in actuality), how could anyone possibly be taxed when they made none.... Absolutely silly.
Companies based in the US selling currency in full view is one thing, but charging on single items which users aqcuire is another. There are so many issues it is hard to know where to start... Firstly, games have international, and fairly anonymous participants. How does the IRS get lists of users, with the data needed to prove who the individual is, where they are located, and that it is indeed that individual, not their brother, sister, son, etc doing the transacting. Credit cards are by far the first thing people think of, but even they are commonly stolen, not to mention there are a variety of ways not to use them now. The number of people going the prepaid route is growing, buying the 30/60 day game cards it will be possible to never need to give verifiable information, and would further grow if the IRS indeed tried to regulate.
What kind of legislative magic would need to be envoked to force taxes on items you haven't even sold. If you found an item, you have every right to delete that item, the idea that you would be taxed by simply finding/keeping it is ludicris. So not only would the IRS need a way to verify every person in these games but also all the data about who found, traded, gave, dropped, bought, and sold what, to whom, when, at what price, etc, and then would have to force game companies to create such a system and give the data, followed by retailers to take, what, drivers licence numbers when selling the pre paid cards?
How would they pick the value of assets, sure, if I sold an item for a certain price, but what if I traded, gave, or received? The markets would be in constant flux, so how would they go about taxing items while in flux and which hadn't even been sold, the IRS now picks values? Some third party? How many people still pirate music, movies, and software? Do people look worried? Ask yourself why that is? The Internet is a hella scary place for the power elite and governing bodies.
This is far from easy, and without major backbending by companies, building massive databasing machines, requiring extremely strict identity checking and losing massive amounts of players for having such measures, and even then not getting proper data, I seriously doubt we will see this kind of thing in the future, near or otherwise.
The only real way they could accomplish this is by taxing the game companies, either in some blanket way or by some other method that takes into account individual transactions or individuals. Similar to Alchohol or Cigs, taxing the source and that in turn funnels down to the consumers. A sort of "MMO gaming" tax, and of course the companies would add this fee to every individual whether they make money or not. But individual taxation on players, without proof of income or identity... I can't even see the beginning of a valid argument for that.
Anyway, I'll do some more reading, perhaps I'll see why they seem to be freaking out, but at the moment it looks like a case of scare tactics = popular news story.
This is all very interesting to read. However, I just had a thought about something that I did not consider before (admittedly, out of ignorance.)
Maybe deverlopers have known about this for some time now (as you say since 2005), and perhaps that is a reasoning behind Bound items being a larger commonplace in MMOs these days. I mean, you can't very well sell something that is Bound to your character. Also, you'll notice in the bigger games, crafting has taken a back seat to an almost unnecissary activity.
It makes you wonder if maybe the devs aren't just being lazy, but might actually be looking out for us.
In any event, this is all very... wrong on so many levels. Once again, a group of people are abusing a system illegally, thus making everyone pay for their gains. I have never bought or sold anything from a video game outside of the game mechanics. I pay my $15 a month, I quest, I loot, I sell for gold on the AH, I buy the crap I want from the AH, and I quest some more. Why should I have to pay a tax for playing the way i am supposed to be playing?
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
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 seem to remember a Declaration of Indpendence that listed ALL of our problems with England, those taxes did piss us off just look at what Boston did.
Anyways I don't think this will happen in games such as LOTRO and WoW that don't do RMT. I could see this done in RMT but as lon as it is against the EULA to do RMT it shouldn't be taxable.
read Ben Franklin's works...
Benjamin Franklin identified this as the real reason for the War of Independence:
"The refusal of King George to operate an HONEST colonial MONEY SYSTEM which freed the ordinary man from the clutches of the manipulators was probably the prime cause of the Revolution."
"The Colonies would gladly have borne the little tax on tea and other matters, had it not been that England took away from the Colonies their money, which created unemployment and dis-satisfaction."
Ben Franklin before the Revolution was called before the King to explain the colonists' prosperity...
"It is because, in the Colonies, we issue our own paper money. We call it Colonial Script, and we issue only enough to move all goods freely from the producers to the Consumers; and as we create our money, we control the purchasing power of money, and have no interest to pay."
The control of money is the very heart of our revolution. It is also why the founding fathers gave the govt the power (and only them which is why the Federal Reserve is illegal) to create money backed by gold.
Our founding fathers were well aware of the inherent danger of allowing a private bank the power to issue currency...
Thomas Jefferson - "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
Unfortunately most americans dont learn the true history of the founding of this nation. The textbooks and education system are owned by the very same folks who own the banks so you arent taught the truth. Taxes had little to do with it, it was the control of money that our founding fathers wanted. Unfortunately we gave up that power to private hands in 1913 with the passage of the unconstitutional Federal Reserve act
Comments
Defendent: "But your honor, I never truly had possession of the Mithril Two-Handed sword, it was held with a tax deductible alt."
Judge: "Not buying that. Bail denied."
If it wasnt for the mass success of WOW and everyone and thier mother on the planet jumping on the WOW wagon. This would never have been thought of. Wow is where the money is at and thats where everyone is pulling in a bundle, from farmers to casual account sellers. So you could say that the extreme success of Disney World WOW is killing the MMO genre.
(PC Specs)
AMD Phenom II 965 3.4 Quad
8GB G-skill Ripjaw 1600mhz
Nvidia Geforce GTX 470 1280mb
Windows 7 64 bit
IRS are bad now, boycott the IRS!
Sorry couldn’t help myself join in the infantile venting we are getting on some of the other threads here.
Frankly, I just do not see it possibly affecting anyone who plays MMOs but never touches RMTs. You have a clear rental relationship with the game company so as long as you return all the rented virtual property back to them when you stop playing you are int eh clear. A renter is not taxed because the property they are renting gained in value.
Will never happen. Do you know anything about tangible and intangible assets? Those in game items are intangible assets. You own them, but you can not physically touch them. If they want to tax on something like that, they would have to tax your character.. and thats just bologna
______________________________
What if Paul Revere was like the boy who cried wolf....?
Originally posted by Hazmal
What does he say when people ask what he did? "My mommy was irking me yo - I wanted to keep pwning nubs on my xbox, so I roughed her up with a hardshell. That is just how I roll."
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
It does make the story less valid. If there was any weight behind this, we'd have heard more about it in the last two years. The IRS already requires taxes on income. If you receive income from the sale of virtual goods, you are responsible for paying taxes on that income. That's what accountants are learning about, not the taxation of goods that have pontential real world market value, but haven't ever changed hands. If if that ever came to be (and it never will), market value would need to be established for literally ever single item that could possible be sold (whether it is sold or not) in order to establish taxation rates. Regardless, the value of any one item, either perceived or real, is largely based on convenience. If I were to sell an item for $100 could I get a tax break by deducting the number of hours it took me to get the item? What if getting the item required a group effort?
Simply put, once again, this will never, ever happen.
~Ripper
Never underestimate the ability and willingness of politicians to impose crippling taxes on things that they don't like. See, for example, tobacco in America, or gasoline in much of Europe, where most of the cost of what you buy is tax.
It's really just a matter of time before some politician decides that playing computer games is bad, and so he wants to heavily tax them to discourage people from playing the games. (I mean here a tax specific to computer games, as opposed to more general sales taxes that apply to a broad variety of goods and services.) The tax won't start out very high, of course, but if he gets away with it, it won't take too long before you're paying a $50/month tax on a $15/month game subscription.
If the first few politicians to try that go down in flames at the next election, that would make the issue radioactive, so others won't try it. There isn't anything politicians understand better than preserving their re-election chances.
This I agree with. We'll see taxes (already do on some game subscriptions, actually), just not income or gains taxes. We'll see use taxes, sales taxes, etc...
~Ripper
okay I found something very recent to satisfy those needing it (only 2 months old)
http://www.virtualworldsnews.com/2008/11/virtual-goods-prices-rise-in-china-after-tax-announcement.html
China is now taxing revenue gained from gold farmers at 20%. Will they take the next step and tax virtual items as well ?
another article, yes its 2 yrs old but still valid because the US goverment hasnt finished its analysis of the subject...
http://money.howstuffworks.com/personal-finance/personal-income-taxes/virtual-tax.htm
The U.S. Congress is actually looking into the taxability of Mighty Rage Potion and Shrouds of Provocation.
The issue of taxing virtual assets is a complicated one, but the primary point of justification offered by many economists, even if they're only talking "in theory," is the fact that these virtual assets have an established real-world value. When gamers started selling their virtual armor and horses and castles for real-world cash, which began long before Dibbell wrote a great story about the extended tax implications of those sales, they established an exchange rate. For instance, since we know what a suit of armor sells for in Everquest or World of Warcraft gold, and we know what the same type of suit of armor sells for on eBay in U.S. dollars, we have a way to establish the an exchange rate between game dollars and U.S. dollars. And theoretically speaking, for tax purposes, anything that has a real dollar value is taxable once it changes hands. So if you sell a suit of armor to another player for a certain amount of gold, it's possible for the IRS to tax that transaction as income earned in the converted U.S. dollar amount of that gold
As you see here, the US goverment is actually pondering the question can they tax you for selling items in-game for the gold you earn.
US government is BAD NOW!
OMG they want to tax us…kill all US Government officials!
This is even better than the SOE nonsense, here the Evil US government has not even done anything yet it seems we need a drama thread. You do realise how many studies by governments end up in a waste bin?
Maybe they will put plans in motion to tax us, if so it than becomes an issue, not now.
My point is that virtual items are being considered potentially taxable. And income earned is certainly taxable. Gold sellers in China are now being taxed at a rate of 20%.
The change to MMO worlds could be profound
I can google, too. Linking the article on Chinese taxations is pointless, since it's explicitly for income earned from selling virtual goods. The US already requires income reporting, as I've already mentioned. The other article is from 2006 and is largely theoretical in nature.
This entire topic is old news, alarmist and borderline trolling.
BTW - here are some other articles, none of which state that the taxation of non-monetized virtual goods are inevitable. instead, you'll notice that the focus is on monetized transactions (within an environment like Second LIfe), rather than imputed income and also on criminal activity, such as money laundering within a virtual environment
Linky...
Linky...
Linky...
~Ripper
Both those articles are over 2 years old.
Fine then, let them tax me. For their info here's my inventory:
0 Gold
A couple of stupid seeds
A small pile of goup
Unless they want to invest more money to get the data off the servers of major MMORPGs and sift through it matching the account names to character names to inventories to items and then to credit cards and finally names and addresses. And what if the person puts in fake info and uses a game time card form Wal-Mart? Totally infeasible idea.
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Telthalion Rohircil - Guardian - Elemandir - Lord of The Rings Online
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== RIP == Torey - Commando - Orion - Tabula Rasa == RIP ==
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Jordaniel Torey - Navy Megathron, Active Armor Tank - Tranquility - EVE Online
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Torey Scott - Rifleman - Fallen Earth
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"I know not with what weapons World War III will be fought, but I know World War IV will be fought with sticks and stones." - Albert Einstein
Do not tempt politicians with the prospect of having more money to spend on their favorite stupid projects if they can find ways around that.
For example, the tax could be required to pay your next month's subscription, so that in order to continue playing, you need to pay not merely the basic subscription fee, but also whatever tax the government decides to charge on the present state of your character.
accountants are discussing this now which is why I brought this issue up to begin with. And so what if the news articles are 2 yrs old. That doesnt mean the issue went away and was forgotten about. Goverments take years to move on an issue. Only a fool would think this is going away or already forgotten.
I suspect those dismissing this and using the lame excuse "well its old news" are fearful of what would happen to their MMO's if this happens.
Like the article said, its not a matter of if but when this happens. Goverments tax money that doesnt exist now, its called digits on a bank's computer. In fact the majority of money doesnt actually exist in physical form these days. They are merely electronic transactions now. Is it really such a leap to think a govt wouldnt come after a virtual world currency profits ?
Yes it does open pandora's box, effectively WoW is a giant casino and subject gambling laws if this happens.
Do not tempt politicians with the prospect of having more money to spend on their favorite stupid projects if they can find ways around that.
For example, the tax could be required to pay your next month's subscription, so that in order to continue playing, you need to pay not merely the basic subscription fee, but also whatever tax the government decides to charge on the present state of your character.
Some states have been taxing WoW subs for a while now. Seems to just be WoW, as I wasn't taxed on FFXI. I just so happen to live in WA state
. This is from the WoW forums:
Players in select states around the U.S. have found that their monthly subscription fee is slightly higher than expected. With the rise of many online subscription-based services, several states have begun to apply a tax to services that use such a model, and this tax is an additional cost that players are seeing added onto the base subscription rate.
Specifically, residents of the following states will be charged this tax:
Illinois
Massachusetts
New Mexico
New York
Texas
Washington
Playing - FFXIV, ESO
Played - FFXI, WoW, Lineage 2, Guild Wars, Aion, SWToR, LotRO, GW2, TERA, Rift, ArcheAge, TSW
Taxiing etheral items huh? Something that does not really exist? Unless the IRS can convince Congress to add a law that allows that, it is not going to happen. They most certainly can't do it under the existing laws. They would get laughed out of the courtroom.
Now someone making real income from a game, they have to report it. I am sure lots of people don't, but it is taxable income.
But getting the sword of ultimate whatever in a game wil never ever be taxable unless you trade it for real income.
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 seem to remember a Declaration of Indpendence that listed ALL of our problems with England, those taxes did piss us off just look at what Boston did.
Anyways I don't think this will happen in games such as LOTRO and WoW that don't do RMT. I could see this done in RMT but as lon as it is against the EULA to do RMT it shouldn't be taxable.
Hold on Snow Leopard, imma let you finish, but Windows had one of the best operating systems of all time.
If the Powerball lottery was like Lotro, nobody would win for 2 years, and then everyone in Nebraska would win on the same day.
And then Nebraska would get nerfed.-pinkwood lotro fourms
AMD 4800 2.4ghz-3GB RAM 533mhz-EVGA 9500GT 512mb-320gb HD
Thats just it right there. You said "unless you trade it for real income"
The fact that x item can be traded for real value gives it a value. If x item sells for an average of 5,000 gold and that same 5k gold can be exchanged for 100 dollars, therefore x item = 100 dollars. Theoretically aquiring x item could mean you owe taxes on 100 dollars.
Its no different than winning a car on a tv gameshow. x car sells for 10,000 dollars therefore you owe sales tax on 10,000.
The only difference is the car actually exists and the x item is virtual.
However here is the real kicker....
By selling items and gold in-game (RMT), developers have legitimized virtual items as having real-world value. The item might not physically exist but nonetheless you own a small piece of gaming code with a real value. And anything gained that has real value is subject to a sales tax.
And if you can buy a virtual item and owe a sales tax on it. You certainly could owe that same sales tax on x item you loot as well. After all, it has real world value.
I'm not even sure I can take any of these links you have given seriously when they are spouting oxymoronic "facts" like,
"That's because game publishers may well in the not-too-distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual-world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons, or Second Life currency, even when those players don't convert the assets into cash."
If the IRS form 1099 is for INCOME (and according to their own form it is $400+ in actuality), how could anyone possibly be taxed when they made none.... Absolutely silly.
Companies based in the US selling currency in full view is one thing, but charging on single items which users aqcuire is another. There are so many issues it is hard to know where to start... Firstly, games have international, and fairly anonymous participants. How does the IRS get lists of users, with the data needed to prove who the individual is, where they are located, and that it is indeed that individual, not their brother, sister, son, etc doing the transacting. Credit cards are by far the first thing people think of, but even they are commonly stolen, not to mention there are a variety of ways not to use them now. The number of people going the prepaid route is growing, buying the 30/60 day game cards it will be possible to never need to give verifiable information, and would further grow if the IRS indeed tried to regulate.
What kind of legislative magic would need to be envoked to force taxes on items you haven't even sold. If you found an item, you have every right to delete that item, the idea that you would be taxed by simply finding/keeping it is ludicris. So not only would the IRS need a way to verify every person in these games but also all the data about who found, traded, gave, dropped, bought, and sold what, to whom, when, at what price, etc, and then would have to force game companies to create such a system and give the data, followed by retailers to take, what, drivers licence numbers when selling the pre paid cards?
How would they pick the value of assets, sure, if I sold an item for a certain price, but what if I traded, gave, or received? The markets would be in constant flux, so how would they go about taxing items while in flux and which hadn't even been sold, the IRS now picks values? Some third party? How many people still pirate music, movies, and software? Do people look worried? Ask yourself why that is? The Internet is a hella scary place for the power elite and governing bodies.
This is far from easy, and without major backbending by companies, building massive databasing machines, requiring extremely strict identity checking and losing massive amounts of players for having such measures, and even then not getting proper data, I seriously doubt we will see this kind of thing in the future, near or otherwise.
The only real way they could accomplish this is by taxing the game companies, either in some blanket way or by some other method that takes into account individual transactions or individuals. Similar to Alchohol or Cigs, taxing the source and that in turn funnels down to the consumers. A sort of "MMO gaming" tax, and of course the companies would add this fee to every individual whether they make money or not. But individual taxation on players, without proof of income or identity... I can't even see the beginning of a valid argument for that.
Anyway, I'll do some more reading, perhaps I'll see why they seem to be freaking out, but at the moment it looks like a case of scare tactics = popular news story.
- Burying Threads Since 1979 -
This is all very interesting to read. However, I just had a thought about something that I did not consider before (admittedly, out of ignorance.)
Maybe deverlopers have known about this for some time now (as you say since 2005), and perhaps that is a reasoning behind Bound items being a larger commonplace in MMOs these days. I mean, you can't very well sell something that is Bound to your character. Also, you'll notice in the bigger games, crafting has taken a back seat to an almost unnecissary activity.
It makes you wonder if maybe the devs aren't just being lazy, but might actually be looking out for us.
In any event, this is all very... wrong on so many levels. Once again, a group of people are abusing a system illegally, thus making everyone pay for their gains. I have never bought or sold anything from a video game outside of the game mechanics. I pay my $15 a month, I quest, I loot, I sell for gold on the AH, I buy the crap I want from the AH, and I quest some more. Why should I have to pay a tax for playing the way i am supposed to be playing?
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 seem to remember a Declaration of Indpendence that listed ALL of our problems with England, those taxes did piss us off just look at what Boston did.
Anyways I don't think this will happen in games such as LOTRO and WoW that don't do RMT. I could see this done in RMT but as lon as it is against the EULA to do RMT it shouldn't be taxable.
read Ben Franklin's works...
Benjamin Franklin identified this as the real reason for the War of Independence:
"The refusal of King George to operate an HONEST colonial MONEY SYSTEM which freed the ordinary man from the clutches of the manipulators was probably the prime cause of the Revolution."
"The Colonies would gladly have borne the little tax on tea and other matters, had it not been that England took away from the Colonies their money, which created unemployment and dis-satisfaction."
Ben Franklin before the Revolution was called before the King to explain the colonists' prosperity...
"It is because, in the Colonies, we issue our own paper money. We call it Colonial Script, and we issue only enough to move all goods freely from the producers to the Consumers; and as we create our money, we control the purchasing power of money, and have no interest to pay."
The control of money is the very heart of our revolution. It is also why the founding fathers gave the govt the power (and only them which is why the Federal Reserve is illegal) to create money backed by gold.
Our founding fathers were well aware of the inherent danger of allowing a private bank the power to issue currency...
Thomas Jefferson - "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
Unfortunately most americans dont learn the true history of the founding of this nation. The textbooks and education system are owned by the very same folks who own the banks so you arent taught the truth. Taxes had little to do with it, it was the control of money that our founding fathers wanted. Unfortunately we gave up that power to private hands in 1913 with the passage of the unconstitutional Federal Reserve act