Any money you make selling your stuff for real world money technically "should" be reported on your tax returns each year. If you sell your gold and make 300$ on it you are legally bound to report it on your earnings. So the idea that the IRS is going to tax us on virtual income is ridiculous because any real money that would be coming out of it theoretically has already been accounted for and taxed.
In terms of whose pocket the money comes out of, there is no difference. This is a standard result of basic economics. Due to elasticity issues, a tax which is ostensibly paid by businesses is mostly passed on to their customers.
The argument for taxing businesses rather than individuals is that it's easier to collect the tax that way.
In terms of whose pocket the money comes out of, there is no difference. This is a standard result of basic economics. Due to elasticity issues, a tax which is ostensibly paid by businesses is mostly passed on to their customers.
The argument for taxing businesses rather than individuals is that it's easier to collect the tax that way.
The companies are taxed already, of course.
------------------------------ "Capitalism is currently working as intended."
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
You keep on stating that it's not your opinion but you've only linked a couple pretty old stories that are not jumping to anywhere near the conclusion that you are:
"paying tax on a sword you loot"
Nope.
rhinok's points are the accurate ones.
Even then, it would be a night-mare for them to try and figure it out. The IRS can't even keep up with the back-log of issues arrising from real money transfers. Now you think they are going to be able to figure out an instantaneous method of charging taxes for virtual items within the game?
Couple of really big holes in your logic:
What happens in Full-loot games?
Like EvE, L2, DarkFall (when it releases)... can players that loot your items be charged with a crime then? Since they stole your money that you are expected to pay taxes on?
I will answer these. nope
What about games that have item decay? When the item is gone, we get our money back that we paid taxes on?
Same as in real life. Nope. You junk a car, do you get your taxes back?
What about games that have your items stay on your corpse when you die? Like EQ. So one day you loot an epic item... paid the taxes. Next day your corpse goes poof before you re-loot it. Is the IRS going to send you a rebate?
Again same as real life. Nope. If you lose an item in real life you paid taxes on you do not get a refund.
What about gifting items, or gold?
There are different tax rules and exceptions for family members with real world items in regards to gifting. So the IRS is going to setup a series of different regs for gifting and family members in game as well?
Very doubtful
Who determines the worth of the items? The IRS? The person themselves? The game company? All are going to have wildly different ideas on that. So, the IRS is going to publish and maintain an database with the value of every item for every MMO?
Same as in real life.
Heh... see the point where they are so back-logged on audits now that it's a really silly notion they could take on something this big. The man hours to try and re-coup some of this would be 10-fold of what they could hope to recover.
The list goes on...
No, this idea wasn't thought through very well. But yeah... we know. It wasn't your idea. You're just the one that keeps on telling us it's coming. For some reason I don't think I'll be losing a lot of sleep over it.
If anything at all happens it will be as rhinok has listed. The places where real money is exchanged... that is the place they would have an opportunity.
It would very pretty easy to do actually. Most MMO company keep a record of what you loot anyways. It would just be more costly for them and in the end for any subscriber
They could easily take an average of what a normal MMO players loots in a month and charge taxes on that based on how many hours you play.
If you think that the IRS would never do it... Take a look at the tax laws right now. Some real crazy stuff there.
No. Your "easy to do" example does not tax the user. It is taxing the MMO company... that is completely different. Show an example of a company being taxed more because of how it's customers use it's product.
You gave an example of them charging an "average" or on the hours... that is not taxing for every gold you loot or each epic item looted. Nope... now you are changing the idea presented.
Face it... just because it's something they would want to do... that doesn't make it happen or feasible.
There are still many real items I can buy today over the internet that have no taxes charged on them. I'd think that would be a starting area for them if they were gung-ho on this. As that would be much easier to implement and regulate.
I guess you guys want to speculate on how easy it would be, and that we'd have no choice in the matter... go for it. I just think it's something silly to worry about when they've proven how inept they are at collecting existing taxes.
This isn't income tax as you're taxing items not gold. It's more like stamp duty - a fee charged (in the UK) of ~1% of a value of a house when it's sold.
I agree with income tax on gold sales - hell if you're getting money from selling your account and not telling the IRS then you're already commiting tax fraud.
-- Note: PlayNC will refuse to allow you access to your account if you forget your password and can't provide a scanned image of the product key for the first product you purchased..... LOL
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
You keep on stating that it's not your opinion but you've only linked a couple pretty old stories that are not jumping to anywhere near the conclusion that you are:
"paying tax on a sword you loot"
Nope.
rhinok's points are the accurate ones.
Even then, it would be a night-mare for them to try and figure it out. The IRS can't even keep up with the back-log of issues arrising from real money transfers. Now you think they are going to be able to figure out an instantaneous method of charging taxes for virtual items within the game?
Couple of really big holes in your logic:
What happens in Full-loot games?
Like EvE, L2, DarkFall (when it releases)... can players that loot your items be charged with a crime then? Since they stole your money that you are expected to pay taxes on?
I will answer these. nope
What about games that have item decay? When the item is gone, we get our money back that we paid taxes on?
Same as in real life. Nope. You junk a car, do you get your taxes back?
What about games that have your items stay on your corpse when you die? Like EQ. So one day you loot an epic item... paid the taxes. Next day your corpse goes poof before you re-loot it. Is the IRS going to send you a rebate?
Again same as real life. Nope. If you lose an item in real life you paid taxes on you do not get a refund.
What about gifting items, or gold?
There are different tax rules and exceptions for family members with real world items in regards to gifting. So the IRS is going to setup a series of different regs for gifting and family members in game as well?
Very doubtful
Who determines the worth of the items? The IRS? The person themselves? The game company? All are going to have wildly different ideas on that. So, the IRS is going to publish and maintain an database with the value of every item for every MMO?
Same as in real life.
Heh... see the point where they are so back-logged on audits now that it's a really silly notion they could take on something this big. The man hours to try and re-coup some of this would be 10-fold of what they could hope to recover.
The list goes on...
No, this idea wasn't thought through very well. But yeah... we know. It wasn't your idea. You're just the one that keeps on telling us it's coming. For some reason I don't think I'll be losing a lot of sleep over it.
If anything at all happens it will be as rhinok has listed. The places where real money is exchanged... that is the place they would have an opportunity.
It would very pretty easy to do actually. Most MMO company keep a record of what you loot anyways. It would just be more costly for them and in the end for any subscriber
They could easily take an average of what a normal MMO players loots in a month and charge taxes on that based on how many hours you play.
If you think that the IRS would never do it... Take a look at the tax laws right now. Some real crazy stuff there.
No. Your "easy to do" example does not tax the user. It is taxing the MMO company... that is completely different. Show an example of a company being taxed more because of how it's customers use it's product.
You obviously did not get what I was saying... The MMO company keeps the records and the IRS uses those records to tax you. That is not tsaxing the MMO company.
You gave an example of them charging an "average" or on the hours... that is not taxing for every gold you loot or each epic item looted. Nope... now you are changing the idea presented.
The idea was taxing what you get in game non tangible items. There has been nothing written about taxing each item.
Face it... just because it's something they would want to do... that doesn't make it happen or feasible.
There are still many real items I can buy today over the internet that have no taxes charged on them. I'd think that would be a starting area for them if they were gung-ho on this. As that would be much easier to implement and regulate.
If you would care to check, there are a number of states doing this already. (trying to tax internet sales) And just so you know, the IRS does not do sales taxes. Other types of taxes, yes, but not sales taxes.
I guess you guys want to speculate on how easy it would be, and that we'd have no choice in the matter... go for it. I just think it's something silly to worry about when they've proven how inept they are at collecting existing taxes.
It is very stupid, but then the IRS has done some very stupid things ass well as our government.
I don't pay cash for in game items, so I'm not worried about that aspect of taxing MMO's.
But if they taxed based on looted items, I do belive my MMO gaming days would quickly be behind me. Taxing virtual items found in a virtual world, with only virtual/gaming worth is ridiculous, and I don't intend to pay taxes on such things.
As any tax lawyer can tell you, the IRS constantly deludes itself that it has to ability to tax anything. The courts generally tell them otherwise. As I stated before, it would require a change in the tax laws by congress for this to be possible.
In your opinion. There are people in the field of law you disagree with you.
As any tax lawyer can tell you, the IRS constantly deludes itself that it has to ability to tax anything. The courts generally tell them otherwise. As I stated before, it would require a change in the tax laws by congress for this to be possible.
In your opinion. There are people in the field of law you disagree with you.
Now imagine you give a sword the worth of 10 cent.
The company decides to produce 10 million of it.
So basically they printed money?
And here I thought only states would do that, but then maybe we all should start printing some.
A simple 'dupe' command and you are RICH!!!!
On the other hand everyone cheating in game could get finally prison sentences!!!!
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
You keep on stating that it's not your opinion but you've only linked a couple pretty old stories that are not jumping to anywhere near the conclusion that you are:
"paying tax on a sword you loot"
Nope.
rhinok's points are the accurate ones.
Even then, it would be a night-mare for them to try and figure it out. The IRS can't even keep up with the back-log of issues arrising from real money transfers. Now you think they are going to be able to figure out an instantaneous method of charging taxes for virtual items within the game?
Couple of really big holes in your logic:
What happens in Full-loot games?
Like EvE, L2, DarkFall (when it releases)... can players that loot your items be charged with a crime then? Since they stole your money that you are expected to pay taxes on?
What about games that have item decay? When the item is gone, we get our money back that we paid taxes on?
What about games that have your items stay on your corpse when you die? Like EQ. So one day you loot an epic item... paid the taxes. Next day your corpse goes poof before you re-loot it. Is the IRS going to send you a rebate?
What about gifting items, or gold?
There are different tax rules and exceptions for family members with real world items in regards to gifting. So the IRS is going to setup a series of different regs for gifting and family members in game as well?
Who determines the worth of the items? The IRS? The person themselves? The game company? All are going to have wildly different ideas on that. So, the IRS is going to publish and maintain an database with the value of every item for every MMO?
Heh... see the point where they are so back-logged on audits now that it's a really silly notion they could take on something this big. The man hours to try and re-coup some of this would be 10-fold of what they could hope to recover.
The list goes on...
No, this idea wasn't thought through very well. But yeah... we know. It wasn't your idea. You're just the one that keeps on telling us it's coming. For some reason I don't think I'll be losing a lot of sleep over it.
If anything at all happens it will be as rhinok has listed. The places where real money is exchanged... that is the place they would have an opportunity.
okay i guess you missed my latest post that countered everything you just argued.
here it goes again....
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.
I don't pay cash for in game items, so I'm not worried about that aspect of taxing MMO's. But if they taxed based on looted items, I do belive my MMO gaming days would quickly be behind me. Taxing virtual items found in a virtual world, with only virtual/gaming worth is ridiculous, and I don't intend to pay taxes on such things.
I agree its ridiculous.
Its the players' faults though. We opened this pandora box by purchasing gold and items from farmers. Add in developers now selling RMT and it establishes real-world value to virtual items.
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.
Exactly.
again someone not reading other posts that disprove this. It doesnt matter if Blizz says its legal or not. Blizz isnt congress and doesnt make laws...
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.
the day they start taxing income is the day i deduct cost of operateing from playing mmo's.
that means they get to pay rent for my home company haveing space in my appartment, cost of food for the worker aka me, paying for the eletricity, my car and my home insurency.
i am sure that you can be creative enough with your deductions that you not only run your home company at a - profit rate so you need to put in your hard earned money from your 2ed job to cover finacial failing so you get to pay even less tax than before
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.
Exactly.
again someone not reading other posts that disprove this. It doesnt matter if Blizz says its legal or not. Blizz isnt congress and doesnt make laws...
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.
The basis of your entire arguement according to that last article you linked is entirely wrong!
Read the last paragraph:
"In short, if you're running a business in a virtual world, or making real profits from MMOG game characters and items, all of that is presently -- and indeed always has been -- taxable under the US Tax Code. The Advocate's report may spur initiatives that will remove some of these activities from assessment and collection ... eventually."
From that paragraph... anyone making real money from virtual items is ALREADY subject to taxation. It's just that it has to be voluntarily submitted... which I'm sure everyone does.
The Advocate's report is wanting to "remove some of these activities from assessment and collection"
So, if anything your thread should be labeled something like...
Did you know you are supposed to be paying taxes on your money made in MMOs?
or
Good News! The Advocate's report is looking to remove some online activities from tax assessment!
When they start making raids and/or putting people in jail from Second Life for not paying taxes... then perhaps it's time to get serious. Until then, I don't think I have to worry about rolling on that Epic.
Yes profitting from gold has always been taxable. My point is the IRS is looking at a capital gains tax on virtual items that have real-world value. Swords, virtual land, etc all might fall under capital gains taxes according to the article.
incorrect. Yes profitting from gold has always been taxable. My point is the IRS is looking at a capital gains tax on virtual items that have real-world value. Swords, virtual land, etc all might fall under capital gains taxes according to the article.
Nothing NEW is being presented in that article. These are already existing tax codes and this report is identifying problem areas, or ways to make them more easy to understand.
Here is a quote you may have missed:
"For the impatient, who just want the sound-bite, it boils down to the position that the existing US Tax Code already covers much of what takes place in virtual environments, with respect to assets, virtual currencies and transactions."
"The core problem that the Advocate outlines is that taxpayers aren't fully aware of their obligations to report assorted virtual earnings and assets, how to do so, and if or when to do so. The Advocate suggests that some activities should simply be made exempt from assessment and collection (presently they are not any more exempt than they would be in the atomic world) simply to improve overall taxpayer compliance."
Show me in that article or in the Report where it talks about the IRS wanting to do anything new? You won't be able to... because the article is talking about the National Taxpayers Advocate Report. The purpose of the report is also in the article:
"the National Taxpayer Advocate to submit a report to Congress each year and in it, among other things, to identify at least 20 of the most serious problems encountered by taxpayers and to make administrative and legislative recommendations to mitigate those problems."
Comments
they should tax gaming companies, not us gamers.
Any money you make selling your stuff for real world money technically "should" be reported on your tax returns each year. If you sell your gold and make 300$ on it you are legally bound to report it on your earnings. So the idea that the IRS is going to tax us on virtual income is ridiculous because any real money that would be coming out of it theoretically has already been accounted for and taxed.
In terms of whose pocket the money comes out of, there is no difference. This is a standard result of basic economics. Due to elasticity issues, a tax which is ostensibly paid by businesses is mostly passed on to their customers.
The argument for taxing businesses rather than individuals is that it's easier to collect the tax that way.
In terms of whose pocket the money comes out of, there is no difference. This is a standard result of basic economics. Due to elasticity issues, a tax which is ostensibly paid by businesses is mostly passed on to their customers.
The argument for taxing businesses rather than individuals is that it's easier to collect the tax that way.
The companies are taxed already, of course.
------------------------------
"Capitalism is currently working as intended."
LOL. Can you picture... Make you toon, you are tax3 dollars for his value .. and after four hours of play you get a bill
1 broken sword junk metal - $ 1.87
2 mud pots .87 cents
50 lizards leather skins $ 4.00
1 new gold breastplate $ 7.97
8 troll spit < crafting stuff > rare now $23.65
this must be paid before next log in.. we take visa and M/C thanks have a nice day lololol
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
You keep on stating that it's not your opinion but you've only linked a couple pretty old stories that are not jumping to anywhere near the conclusion that you are:
"paying tax on a sword you loot"
Nope.
rhinok's points are the accurate ones.
Even then, it would be a night-mare for them to try and figure it out. The IRS can't even keep up with the back-log of issues arrising from real money transfers. Now you think they are going to be able to figure out an instantaneous method of charging taxes for virtual items within the game?
Couple of really big holes in your logic:
What happens in Full-loot games?
Like EvE, L2, DarkFall (when it releases)... can players that loot your items be charged with a crime then? Since they stole your money that you are expected to pay taxes on?
I will answer these. nope
What about games that have item decay? When the item is gone, we get our money back that we paid taxes on?
Same as in real life. Nope. You junk a car, do you get your taxes back?
What about games that have your items stay on your corpse when you die? Like EQ. So one day you loot an epic item... paid the taxes. Next day your corpse goes poof before you re-loot it. Is the IRS going to send you a rebate?
Again same as real life. Nope. If you lose an item in real life you paid taxes on you do not get a refund.
What about gifting items, or gold?
There are different tax rules and exceptions for family members with real world items in regards to gifting. So the IRS is going to setup a series of different regs for gifting and family members in game as well?
Very doubtful
Who determines the worth of the items? The IRS? The person themselves? The game company? All are going to have wildly different ideas on that. So, the IRS is going to publish and maintain an database with the value of every item for every MMO?
Same as in real life.
Heh... see the point where they are so back-logged on audits now that it's a really silly notion they could take on something this big. The man hours to try and re-coup some of this would be 10-fold of what they could hope to recover.
The list goes on...
No, this idea wasn't thought through very well. But yeah... we know. It wasn't your idea. You're just the one that keeps on telling us it's coming. For some reason I don't think I'll be losing a lot of sleep over it.
If anything at all happens it will be as rhinok has listed. The places where real money is exchanged... that is the place they would have an opportunity.
It would very pretty easy to do actually. Most MMO company keep a record of what you loot anyways. It would just be more costly for them and in the end for any subscriber
They could easily take an average of what a normal MMO players loots in a month and charge taxes on that based on how many hours you play.
If you think that the IRS would never do it... Take a look at the tax laws right now. Some real crazy stuff there.
No. Your "easy to do" example does not tax the user. It is taxing the MMO company... that is completely different. Show an example of a company being taxed more because of how it's customers use it's product.
You gave an example of them charging an "average" or on the hours... that is not taxing for every gold you loot or each epic item looted. Nope... now you are changing the idea presented.
Face it... just because it's something they would want to do... that doesn't make it happen or feasible.
There are still many real items I can buy today over the internet that have no taxes charged on them. I'd think that would be a starting area for them if they were gung-ho on this. As that would be much easier to implement and regulate.
I guess you guys want to speculate on how easy it would be, and that we'd have no choice in the matter... go for it. I just think it's something silly to worry about when they've proven how inept they are at collecting existing taxes.
This isn't income tax as you're taxing items not gold. It's more like stamp duty - a fee charged (in the UK) of ~1% of a value of a house when it's sold.
I agree with income tax on gold sales - hell if you're getting money from selling your account and not telling the IRS then you're already commiting tax fraud.
--
Note: PlayNC will refuse to allow you access to your account if you forget your password and can't provide a scanned image of the product key for the first product you purchased..... LOL
As any tax lawyer can tell you, the IRS constantly deludes itself that it has to ability to tax anything. The courts generally tell them otherwise.
As I stated before, it would require a change in the tax laws by congress for this to be possible.
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
You keep on stating that it's not your opinion but you've only linked a couple pretty old stories that are not jumping to anywhere near the conclusion that you are:
"paying tax on a sword you loot"
Nope.
rhinok's points are the accurate ones.
Even then, it would be a night-mare for them to try and figure it out. The IRS can't even keep up with the back-log of issues arrising from real money transfers. Now you think they are going to be able to figure out an instantaneous method of charging taxes for virtual items within the game?
Couple of really big holes in your logic:
What happens in Full-loot games?
Like EvE, L2, DarkFall (when it releases)... can players that loot your items be charged with a crime then? Since they stole your money that you are expected to pay taxes on?
I will answer these. nope
What about games that have item decay? When the item is gone, we get our money back that we paid taxes on?
Same as in real life. Nope. You junk a car, do you get your taxes back?
What about games that have your items stay on your corpse when you die? Like EQ. So one day you loot an epic item... paid the taxes. Next day your corpse goes poof before you re-loot it. Is the IRS going to send you a rebate?
Again same as real life. Nope. If you lose an item in real life you paid taxes on you do not get a refund.
What about gifting items, or gold?
There are different tax rules and exceptions for family members with real world items in regards to gifting. So the IRS is going to setup a series of different regs for gifting and family members in game as well?
Very doubtful
Who determines the worth of the items? The IRS? The person themselves? The game company? All are going to have wildly different ideas on that. So, the IRS is going to publish and maintain an database with the value of every item for every MMO?
Same as in real life.
Heh... see the point where they are so back-logged on audits now that it's a really silly notion they could take on something this big. The man hours to try and re-coup some of this would be 10-fold of what they could hope to recover.
The list goes on...
No, this idea wasn't thought through very well. But yeah... we know. It wasn't your idea. You're just the one that keeps on telling us it's coming. For some reason I don't think I'll be losing a lot of sleep over it.
If anything at all happens it will be as rhinok has listed. The places where real money is exchanged... that is the place they would have an opportunity.
It would very pretty easy to do actually. Most MMO company keep a record of what you loot anyways. It would just be more costly for them and in the end for any subscriber
They could easily take an average of what a normal MMO players loots in a month and charge taxes on that based on how many hours you play.
If you think that the IRS would never do it... Take a look at the tax laws right now. Some real crazy stuff there.
No. Your "easy to do" example does not tax the user. It is taxing the MMO company... that is completely different. Show an example of a company being taxed more because of how it's customers use it's product.
You obviously did not get what I was saying... The MMO company keeps the records and the IRS uses those records to tax you. That is not tsaxing the MMO company.
You gave an example of them charging an "average" or on the hours... that is not taxing for every gold you loot or each epic item looted. Nope... now you are changing the idea presented.
The idea was taxing what you get in game non tangible items. There has been nothing written about taxing each item.
Face it... just because it's something they would want to do... that doesn't make it happen or feasible.
There are still many real items I can buy today over the internet that have no taxes charged on them. I'd think that would be a starting area for them if they were gung-ho on this. As that would be much easier to implement and regulate.
If you would care to check, there are a number of states doing this already. (trying to tax internet sales) And just so you know, the IRS does not do sales taxes. Other types of taxes, yes, but not sales taxes.
I guess you guys want to speculate on how easy it would be, and that we'd have no choice in the matter... go for it. I just think it's something silly to worry about when they've proven how inept they are at collecting existing taxes.
It is very stupid, but then the IRS has done some very stupid things ass well as our government.
I don't pay cash for in game items, so I'm not worried about that aspect of taxing MMO's.
But if they taxed based on looted items, I do belive my MMO gaming days would quickly be behind me. Taxing virtual items found in a virtual world, with only virtual/gaming worth is ridiculous, and I don't intend to pay taxes on such things.
In your opinion. There are people in the field of law you disagree with you.
In your opinion. There are people in the field of law you disagree with you.
Now imagine you give a sword the worth of 10 cent.
The company decides to produce 10 million of it.
So basically they printed money?
And here I thought only states would do that, but then maybe we all should start printing some.
A simple 'dupe' command and you are RICH!!!!
On the other hand everyone cheating in game could get finally prison sentences!!!!
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
You keep on stating that it's not your opinion but you've only linked a couple pretty old stories that are not jumping to anywhere near the conclusion that you are:
"paying tax on a sword you loot"
Nope.
rhinok's points are the accurate ones.
Even then, it would be a night-mare for them to try and figure it out. The IRS can't even keep up with the back-log of issues arrising from real money transfers. Now you think they are going to be able to figure out an instantaneous method of charging taxes for virtual items within the game?
Couple of really big holes in your logic:
What happens in Full-loot games?
Like EvE, L2, DarkFall (when it releases)... can players that loot your items be charged with a crime then? Since they stole your money that you are expected to pay taxes on?
What about games that have item decay? When the item is gone, we get our money back that we paid taxes on?
What about games that have your items stay on your corpse when you die? Like EQ. So one day you loot an epic item... paid the taxes. Next day your corpse goes poof before you re-loot it. Is the IRS going to send you a rebate?
What about gifting items, or gold?
There are different tax rules and exceptions for family members with real world items in regards to gifting. So the IRS is going to setup a series of different regs for gifting and family members in game as well?
Who determines the worth of the items? The IRS? The person themselves? The game company? All are going to have wildly different ideas on that. So, the IRS is going to publish and maintain an database with the value of every item for every MMO?
Heh... see the point where they are so back-logged on audits now that it's a really silly notion they could take on something this big. The man hours to try and re-coup some of this would be 10-fold of what they could hope to recover.
The list goes on...
No, this idea wasn't thought through very well. But yeah... we know. It wasn't your idea. You're just the one that keeps on telling us it's coming. For some reason I don't think I'll be losing a lot of sleep over it.
If anything at all happens it will be as rhinok has listed. The places where real money is exchanged... that is the place they would have an opportunity.
okay i guess you missed my latest post that countered everything you just argued.
here it goes again....
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/
I agree its ridiculous.
Its the players' faults though. We opened this pandora box by purchasing gold and items from farmers. Add in developers now selling RMT and it establishes real-world value to virtual items.
Exactly.
again someone not reading other posts that disprove this. It doesnt matter if Blizz says its legal or not. Blizz isnt congress and doesnt make laws...
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/
the day they start taxing income is the day i deduct cost of operateing from playing mmo's.
that means they get to pay rent for my home company haveing space in my appartment, cost of food for the worker aka me, paying for the eletricity, my car and my home insurency.
i am sure that you can be creative enough with your deductions that you not only run your home company at a - profit rate so you need to put in your hard earned money from your 2ed job to cover finacial failing so you get to pay even less tax than before
Exactly.
again someone not reading other posts that disprove this. It doesnt matter if Blizz says its legal or not. Blizz isnt congress and doesnt make laws...
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/
The basis of your entire arguement according to that last article you linked is entirely wrong!
Read the last paragraph:
"In short, if you're running a business in a virtual world, or making real profits from MMOG game characters and items, all of that is presently -- and indeed always has been -- taxable under the US Tax Code. The Advocate's report may spur initiatives that will remove some of these activities from assessment and collection ... eventually."
From that paragraph... anyone making real money from virtual items is ALREADY subject to taxation. It's just that it has to be voluntarily submitted... which I'm sure everyone does.
The Advocate's report is wanting to "remove some of these activities from assessment and collection"
So, if anything your thread should be labeled something like...
Did you know you are supposed to be paying taxes on your money made in MMOs?
or
Good News! The Advocate's report is looking to remove some online activities from tax assessment!
When they start making raids and/or putting people in jail from Second Life for not paying taxes... then perhaps it's time to get serious. Until then, I don't think I have to worry about rolling on that Epic.
incorrect.
Yes profitting from gold has always been taxable. My point is the IRS is looking at a capital gains tax on virtual items that have real-world value. Swords, virtual land, etc all might fall under capital gains taxes according to the article.
Nothing NEW is being presented in that article. These are already existing tax codes and this report is identifying problem areas, or ways to make them more easy to understand.
Here is a quote you may have missed:
"For the impatient, who just want the sound-bite, it boils down to the position that the existing US Tax Code already covers much of what takes place in virtual environments, with respect to assets, virtual currencies and transactions."
"The core problem that the Advocate outlines is that taxpayers aren't fully aware of their obligations to report assorted virtual earnings and assets, how to do so, and if or when to do so. The Advocate suggests that some activities should simply be made exempt from assessment and collection (presently they are not any more exempt than they would be in the atomic world) simply to improve overall taxpayer compliance."
Show me in that article or in the Report where it talks about the IRS wanting to do anything new? You won't be able to... because the article is talking about the National Taxpayers Advocate Report. The purpose of the report is also in the article:
"the National Taxpayer Advocate to submit a report to Congress each year and in it, among other things, to identify at least 20 of the most serious problems encountered by taxpayers and to make administrative and legislative recommendations to mitigate those problems."