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Role Playing (Games) Government The Almighty Buck Politics

Congress to Revisit Virtual Goods Taxation 205

Posted by Zonk from the rollercoaster-of-anti-fun dept.
News.com has the word that congress is set to re-visit taxing virtual goods, a concept they shelved a while back in order to consider the matter more fully. That's given the Congress' Joint Economic Committee time to come to a decision about what exactly the value of virtual goods means for players and game-makers. An economist with the group told CNet to expect their report sometime next month. "What that report will say is unknown, as the committee has kept entirely quiet about its thoughts. However, it's clear that something will happen. 'Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues,' [senior economist Dan] Miller, who is a fan of virtual worlds and economies, told CNET News.com in December. 'So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.'"
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Congress to Revisit Virtual Goods Taxation More

Congress to Revisit Virtual Goods Taxation

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  • Live with it... (Score:3, Insightful)

    by __aaclcg7560 ( 824291 ) on Saturday June 23, 2007 @06:53PM (#19623991)
    Even in the virtual world, you have death and taxes.

  • Why not do it yourself? (Score:4, Insightful)

    by MSTCrow5429 ( 642744 ) on Saturday June 23, 2007 @06:53PM (#19623995)
    If you're going to tax virtual items, why not just use the approach used to eBay, in which you are responsible for tracking and calculating your taxable burden, and reporting it on your tax return? Of course, almost no one will do this, but people have a habit of not paying taxes for what they don't want or need, or view as illegitimate. Which is something the government should have to deal with in a more civilized fashion.

    • Re:Why not do it yourself? (Score:5, Insightful)

      by fishthegeek ( 943099 ) on Saturday June 23, 2007 @07:10PM (#19624115) Journal
      You kind of answered your own question. People do not honestly report income from those sales. What is the American state or federal government to do when the game is sponsored on the intratubes by a foreign company? This isn't a very practical idea at all. The value of a virtual piece of property is only extant when there is a population willing to pay real currency for it, and by the nature of the tubes that population might only exist for the lifespan of an African fruit fly! Unless the government is going to get fully into banking and force everyone to receive funds directly through the central bank and assess taxes there this is really a no starter.
      • >>People do not honestly report income from those sales.

        Stop taxing income. It's that simple. Charge a 20% VAT for everything sold in the USA and make sellers responsible for collecting taxes. The VAT would not apply to the first $20k spent and would not apply to items that I bought and re-sold.

        Maybe that would finally stop the practice of rich fuckers not paying income taxes. It's pretty hard to loophole a 20% tax on a new yacht.
        • The VAT would not apply to the first $20k spent and would not apply to items that I bought and re-sold.

          I think you explained why your idea wouldn't work. What if everything I buy over $20k I resell to my cousin and he lets me use it?

          For any tax system to work it should be flat, no exceptions. Let's say my church buys an SUV to bring the children to sunday school. Tax exempt of course, could you imagine any more noble use for an SUV? OK, but who will be responsible for checking if the reverend isn't using t

          • I think you explained why your idea wouldn't work. What if everything I buy over $20k I resell to my cousin and he lets me use it?

            Except you seem to forget that his cousin would still have to pay 20%. Once way or the other, someone is paying that 20%. It doesn't matter if it's the original purchaser or the second. The second simply acquired the tax liability. In other words, the cousin more than likely wouldn't purcahse it because it doesn't help and even if he did, the tax is still paid. Not to mentio
          • Maybe I didn't explain properly.

            The first $20k of expenses for all families would be exempt from the VAT. Everything else would be taxed at 20%.

            If, in any given year, I bought $21k worth of goods, I would pay $1000 * 20% tax.

            If you bought $2,000,000 worth of goods, you would pay $1,980,000 * 20% tax.

            If I bought a TV and then re-sold it, neither the buyer or seller would have to track the tax. The tax on the TV would have already have been paid at first sale.

            Obviously, if you run, for example, an e-bay bus

      • Re: (Score:2)

        by jez9999 ( 618189 )
        sponsored on the intratubes by a foreign company

        Look, when did the Slashdot tradition become to use retarded AOL-speak words instead of proper ones? It's called the 'internet', please at least use the proper word when you're trying to make a serious point.

  • Awesome (Score:5, Funny)

    by CrazyJim1 ( 809850 ) on Saturday June 23, 2007 @07:04PM (#19624063) Journal
    I can't wait to do tax write offs for giving gold out to newbies.
    • What about my donated services as a healer? I rez people who aren't in my team all the time. And what is a life worth?
      • Ok, you should be able to deduct the cost of decay on your chip for the rez, but then keep track of your skill gains, as that would be your income from that. xD
    • But it would be interesting to see some players form a non-profit company whose only assets were in-game.

      Does the government REALLY understand what it's getting into? I don't think so.

      What about theft? Or ganking? If it is taxable, does the loss of it reduce your taxes?
      • If you read the EULAs of games like MMOs very closely (second life is the exception rather than the rule) you will find that the company that produces the game "owns" all the items on all the characters on all the servers. This is part of the reason why they ban the selling of virtual goods for real cash. You can't sell something you don't own. So where does that leave the IRS? Sure, money changed hands and they can tax that as income, but can they tax virtual goods that didn't change hands? Sounds like

        • Re: (Score:2)

          by jkabbe ( 631234 )
          The fact that the income came from illegal activities didn't stop Al Capone from going to jail, and it won't help you either. The IRS doesn't care how you made the money, just the fact that you made it.
        • you will find that the company that produces the game "owns" all the items on all the characters on all the servers. This is part of the reason why they ban the selling of virtual goods for real cash. You can't sell something you don't own.

          Sounds like you are indirectly making the argument that the people purchasing the gold should be charged with receiving stolen goods.

      • Re: (Score:3, Insightful)

        by ConceptJunkie ( 24823 ) *
        Does the government REALLY understand what it's getting into?

        Yes they do, it's the same business they've been in for many years.

        "You've got money: Give it to me!"

  • Big deal (Score:5, Funny)

    by weave ( 48069 ) on Saturday June 23, 2007 @07:08PM (#19624093) Journal
    I'll just remit my copper to the IRS via in-game mail. They can use the gold they collect to buy more Fel Iron shells my engineer makes for shipment to the troops in Iraq. That will drive the cost sky high. I'll be rich and can get that elite flying mount soon!
  • How does virtual goods and gold from wow translate into real money for the IRS?

    Seems silly and a waste of time. People do not use virtual gold on wow for real currencies though the spammers and pharmers seem to make money off it.

    Until virtual currencies become worth accepting on the financial market then its a waste of time.

    • How does virtual goods and gold from wow translate into real money for the IRS?
      Personally I think it should depend on whether the virtual goods and gold are convertible to US dollars or not. If not, it's just a game and shouldn't be taxed. However if they are easily converted to US dollars, I can't see a good reason why they shouldn't be treated like any other foreign currency/assets.
    • Taxing virtual goods is stupid.

      Virtual goods should be treated just like stock, or any other valuable non-currency good that you might invest in.

      When you're just holding on to it, and not doing anything with it, there's no tax. But when you go to sell it, then you are responsible for paying tax on that income. (In order to avoid paying tax on the entire amount raised by the sale, you can go back and establish the original price you paid for the good, and only pay tax on the money you made -- this is simple

      • Re: (Score:2)

        by Znork ( 31774 )
        "or any other valuable non-currency good that you might invest in."

        s/valuable non-currency good/pyramid scheme/g

        Virtual goods are non-scarce items without any inherent value. As such they are not comparable with stocks, but rather with monopoly money or pyramid investments.

        Otherwise I'd say you're perfectly right. Just because it's small enough not to be noticed and hard enough to trace that the IRS might not care doesnt mean it isnt income and taxable. I dont see why there would be a need for any specific

  • Its really really simple.... (Score:4, Insightful)

    by 3seas ( 184403 ) on Saturday June 23, 2007 @07:19PM (#19624179) Homepage Journal
    ....pay the taxes in virtual money/value and let the government trade it in for something they can use, like virtual weapons of mass destruction or virtual anti-terrorist defence, or for the more domestic spending, virtual road repair, virtual food stamps, virtual housing for the poor, etc...

    • Re:Its really really simple.... (Score:4, Funny)

      by Original Replica ( 908688 ) on Saturday June 23, 2007 @07:39PM (#19624307) Journal
      So when I sign up for a game I will have to play on a pre-taxed server, where everone's gold intake is lowered by 25% and the difference is deposited into a IRS avatar account. The in-game economy will be effected 0% and Uncle Sam will lose money paying someone to spam the trade channels with "BUY 5mil CREDITS ONLY $24 @ IRS.gov/mmorpg"
    • They're already doing quite well with virtual WMDs and virtual terrorism defense. I just wish that it really was virtual money that they were using for all of it.
    • Think of what would happen if the government instituted a pithy 5% consumption tax on Azeroth. Across all US servers. And then opened an office to sell the resulting gold for US dollars. That would be an entirely real headache for an entirely real several-hundred-million-dollars.

      (If this strikes you as unlikely, replace it with them taxing gold-for-dollars transactions, as they already theoretically do. All they need is a way to actually discover that the transactions are taking place, in the same way t
  • come from this as a big pro. As people will not want to pay tax for in game gold and other things that eula says is = to $0 usd if not. People who just play the game with out trading in game stuff for cash will quit the game.

    Second Life eula says that in game things do have cash value so they may be in for some big time IRS work load also they may also have to crack down in game Casinos and other things that may not be lawful in some states / areas.
  • ... I mean, what else is there to do anyway?

  • This is proof that income tax is a fraud (Score:5, Insightful)

    by JoeShmoe ( 90109 ) <askjoeshmoe@hotmail.com> on Saturday June 23, 2007 @07:38PM (#19624305)

    So, not only is the IRS adamant about taxing "all income" ...they are now stretching it beyond the boundaries of absurdity.

    Basically, what is happening here is that someone is saying "I have 1,000,000 hippo bucks" and the IRS is trying to establish some metric of determining how much a "hippo buck" is worth in US dollars so they can tax it. OK, Slashdot: I'm offering those 1,000,000 hippo bucks for sale...who's going to buy them from me and establish the official conversion rate?

    Oh wait, nobody because even a billion "hippo bucks" aren't worth anything. So then if I give someone 10,000 of my hippo bucks, has a transaction occured? Choose your own adventure:

    Answer YES: Then guess f'ing what...every game of Monopoly is income and so, in aggregate, the population of the US probably owes trillions in unreported income to the IRS for all the games of Monopoly that have been played since its creation.

    Answer NO: Then you're instantly smarter than our entire Congress and IRS because you realize that ITS A FREAKIN GAME. As soon as the game is dissolve, said "income" evaporates into thin air. That's the point. Sure, MMORPGs may run a lot longer than your typical game of Monopoly but guess what...if Sony went out of business and Everquest turned off its servers, then what would be left? Nothing but memories and bragging rights...which is all that's really left after a game of Monopoly.

    Virtual taxes should be paid in virtual dollars. All the servers and the space the occupy, you know...reality, are already taxed at every possible level. Otherwise, what's to stop the IRS from taxing your score in Pac-Man? Couldn't that spot on the Hi-Score list have value and be auctioned on eBay? (L@@K YOUR INITIALS ON TOP!!! NO RESERVE!) Or how about those packets currently flowing into my computer...don't those have value? If someone idiot buys a single packet from me for $1000, then we are all screwed. ...

    As a closing note, I'm uncomfortable with how easily my analogy about fictional money and invented wealth matches a description of the current US currency system. Hrm. Maybe the entire US banking system is already an MMORPG.

    -JoeShmoe
    .

    • Re:This is proof that income tax is a fraud (Score:5, Insightful)

      by Aladrin ( 926209 ) on Saturday June 23, 2007 @08:34PM (#19624573)
      Your newly created Hippo bucks probably are worthless. But 'gold' in WoW is not. The proof is that businesses exist only to sell it for real money. http://www.google.com/search?hl=en&q=wow%20gold&bt nG=Google+Search [google.com]

      According to the sites I just went to, 1000 gold is worth $60-100. So it does indeed have value.

      The problem is not taxing someone's income, it's trying to tax it before it becomes income. If the person sells that gold on EBay (or otherwise for real USD), it -should- be taxed. If they merely hold it on their character and do nothing, there should be no tax. Oddly enough, the current tax laws -should- cover this already. If people aren't paying the tax, that's the government's fault for not cracking down on tax evasion.

      Blizzard has a very real problem if the government starts to tax the virtual goods directly. That means that the characters, items, and gold on their servers have real value, and if they take that value from someone, or deprive them of access to it, they can be sued. That means that if someone cancels their account, they have to either continue to provide access to it, or pay them out. And if there's a data failure, they have to reimburse everyone. (Luckily, they could do so in WoW Gold, which they can make freely.)

      Blizzard does have one ace up their sleeve for this fight, though. They have already made it clear that selling gold for real USD is against the TOS and is not allowed. This is quite clearly saying that it has no real value.

      At any rate, the summary is deliberately starting a ruckus. They have said they are looking into it finally, not that they favor taxing it or any such thing. At -some- point they had to meet, even if only to say 'not taxable' and lay it to rest.

      • Re: (Score:2)

        by JoeShmoe ( 90109 )
        That was my point. How does changing one form of goods and service into another count as "income"? It's an exchange. I'm trading piece of paper worth X into bits worth Y. Neither of them has any inherient value beyond what is promised by the writing on the paper or the function of the bits. It's still not income.

        I'm unaware of any taxes that apply to money changing. I'm sure there's service fees and what-not, but (I hope) that there's no tax that is collected just for changing dollars into pesos, poun

        • Re: (Score:2)

          by Aladrin ( 926209 )
          If you want to treat WoW's gold as legal currency, it IS income as you are earning it, since it can be traded for real money.

          If I work for room and board, instead of money, that's still income. The money just went directly towards room and board instead.

          If I play WoW and earn 1000 gold, then sell it for $100, that's $100 worth of income. If I don't see it, it's still worth the same $100, even if I don't do the currency conversion.

          If instead, you treat WoW gold as an object (the way real gold is treated, e

    • Re: (Score:2, Interesting)

      by insignificant_wrangl ( 1060444 )

      O.k., lets take a deep breath. I don't like paying taxes either, but if you read the articles, you'll see that Miller is proposing taxing players who have accrued millions of real world dollars:

      LaPiana said that there is little question that the transfer of such assets could be taxable, since it is property. However, he did say that the taxes would accrue only if the total value of the estate's assets, at the time of death, exceeded the limit set by the state in which the deceased had lived. In most cases

    • Re: (Score:3, Insightful)

      by KiahZero ( 610862 )
      This post is more indicative of your ignorance than the ignorance of policy-makers. Then again, your subject line pretty much demonstrates that you have no idea what you're talking about.

      The income in question isn't your virtual income, it's your real-world income that comes as a consequence of that virtual income. Unlike Monopoly money, you can sell your virtual currency for real money... that means that it has a real-world value. Even if you don't plan on selling your currency, it still has value because

      • Re: (Score:3, Insightful)

        by JoeShmoe ( 90109 )
        How the hell do you "sell" currency? The only entity that can do that is the Federal Reserve, selling notes that cost five or ten cents to make for face value. For everything else in the US, it's just an exchange.

        Person A gives a $5 bill to Person B in exchange for five $1 bills. Who has profitted? Nobody...it's a "like kind exchange" and obvious to anyone older than five. And yet, the IRS wants to be the sole agent for determining what is a "like kind exchange". Trading a large swamp for a small fore

        • How the hell do you "sell" currency? The only entity that can do that is the Federal Reserve, selling notes that cost five or ten cents to make for face value. For everything else in the US, it's just an exchange.

          Hooray for pedantry. The exchange of virtual-world currency for real-world currency is frequently called a "sale" because the virtual-world currency is treated as a good rather than as currency. Dwelling on this fact is inconsequential, because whether it's called a sale or an exchange doesn't matter at all for the purpose of this discussion.

          Person A gives a $5 bill to Person B in exchange for five $1 bills. Who has profitted? Nobody...it's a "like kind exchange" and obvious to anyone older than five. And yet, the IRS wants to be the sole agent for determining what is a "like kind exchange". Trading a large swamp for a small forest of equal "value"? Exchange. Trading a male cow for a female cow? Taxable. I pay $250/mo for my own medical insurance and my employer pays me $250/mo to reimburse me. Is that taxable income or a tax-free exchange? In order to know, I would have to slog through something like this:

          http://www.irs.gov/irb/2005-16_IRB/ar08.html [irs.gov]

          Yes, the law is complicated. Otherwise, there would be loopholes that would make the ones that exist look tiny by comparison. Deal with it: either figure it out yours

          • Re: (Score:3, Informative)

            by JoeShmoe ( 90109 )

            "whether it's called a sale or an exchange doesn't matter at all for the purpose of this discussion"

            Yes, it does because a sale is income and therefore taxable and an exchange is not. You conveniently avoided this point throughout your entire response.

            "Yes, the law is complicated. Otherwise, there would be loopholes that would make the ones that exist look tiny by comparison. Deal with it: either figure it out yourself or hire more adept than yourself to do it for you."

            Considering I've had two different ta
    • If you replace "hippo bucks" with "hippo shares" then you have a similar, completely abstract currency. If they went bankrupt, there'd be nothing but sweet memory left of those stocks either. Yet somehow, we manage to set a market value to that. Deltas in that value are considered profits or losses. For 99% of us the value would go in zero anyway once you cancel your WoW account. Taxing people that make a real-world profit this way is hardly unreasonable, at least not anymore than any other income tax.
      • The "hippo shares" analogy is not quite correct: (regular)shares are a fractional ownership of REAL companies that have legal status, registration with authorities, employees and assets. Sure the value is largely dependent on what people are willing to pay for them, but make no mistake: a share does equal ownership (of a small part) of something real and tangible.

        A "hippo share" would be a share of something purely imagined and intangible. There may be a demand for them, people may even be willing to pay ri

  • What are they thinking? (Score:3, Insightful)

    by penguinbrat ( 711309 ) on Saturday June 23, 2007 @07:45PM (#19624339)
    Seriously, it real life - the taxes go for things that effect us physically or that the entities we pay provide a service we use even if indirectly.

    In real life taxes pay for...

    1) roads
    2) traffic control (stop signs, lights, etc...)
    3) financial assistance (welfare, medicare, etc..)
    4) law enforcement
    5) military (protection of way of life)
    6) etc...

    I used to play WoW, so I'll use that as my example...
    1) environment - developed and controlled by game maker
    2) traffic control - disigned/mantained by your ISP
    3) law enforcement - in game police, gamers paid by developer to help keep things under control - GM's
    4) military protection - the particular guild your in, you pay them taxes via items found, helping noobs, etc...

    Everything is covered and we pay either the ISP or the game maker (Blizzard in this case) and the government does not provide anything as far as I can tell. If they were to start collecting taxes what could they possibly offer that's not already covered?

    Taxes: [wikipedia.org] Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Most modern governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities. Colonial and moderning states have also used cash taxes to draw or force reluctant subsistence producers into cash economies.

    The above is all covered by the developer, if it even exists - again what could they possibly offer? It's not like they can re-write the game engine to add an educational system if doesn't already exist...

    • Re: (Score:2)

      by ahodgson ( 74077 )
      You forgot: wars against oil-producing countries, bridges to nowhere, etc. They always need more money.
      • wars against oil-producing countries: In theory at least it is to keep the cost of oil down - that is the excuse at least that we would benefit from

        bridges to nowhere: They are still physically in existence so we can use them if we wanted to turn around or something, or take pictures or something just as pointless - or even bitch about wasting money


        Again - what could they provide in a virtual word created by someone else, even if it was just something to bitch about? Are they going to start creating l
  • With Illegal Immigration on the table, and a war in Iraq, along with their ratings being the lowest ever, how do they have time to even consider messing in our lives otherwise? Or do they plan to ship all the illegals to Second Life as a solution that both sides will buy?

  • Let's translate this BS-heavy synopsis (Score:3, Insightful)

    by Mr. Underbridge ( 666784 ) on Saturday June 23, 2007 @07:46PM (#19624345)

    Let's translate this damned thing into reality:

    congress is set to re-visit taxing virtual goods, a concept they shelved a while back in order to consider the matter more fully.

    Congress, as a whole, doesn't fucking care.

    'Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues,'

    I extrapolate exponential trends, showing my poor grasp of statistics. I also make baseless speculations sound important by name-dropping governmental agencies.

    Miller, who is a fan of virtual worlds and economies, told CNET News.com in December. 'So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.'"

    Somebody with way too much time on his hands takes this shit way too seriously.

  • If I were an American, and a fictional story about me winning a hundred million dollars got published in a magazine, the IRS would expect to be able to actually tax me on those fictional winnings?

    What goes on in these games is not real... it is fiction. And somehow the IRS figures its not only entitled to a portion of what you actually make, but also a portion of what you might have _imagined_ yourself making?

    Uhmm... wow. Just wow.

  • Are Linden Dollars even lawful currency? Once only silver and gold were considered lawful. Now days Federal Reserve Notes qualify, since people tried to avoid paying taxes on "non-lawful" earnings.

    Also, are these earnings "overseas" earnings that might avoid taxation. After all, show me just where in the USA my SL property is located.

    Most of all, will Linden Research turn over records to the IRS that they would need in order to track users down. And can you hide yourself through foreign proxies? Af

    • Is the Euro even a lawful currency? Not in the USA, nobody is required to accept it in payment. However it's easily converted to US dollars, and if you have income in Euro but resident in the USA, you will most likely be taxed on the income (depending on US tax law.)

    • Are Linden Dollars even lawful currency? Once only silver and gold were considered lawful. Now days Federal Reserve Notes qualify, since people tried to avoid paying taxes on "non-lawful" earnings. Also, are these earnings "overseas" earnings that might avoid taxation. After all, show me just where in the USA my SL property is located.

      Is the Euro even a lawful currency? Not in the USA, nobody is required to accept it in payment. However it's easily converted to US dollars, and if you have income in Euro

  • income is already taxed (Score:3, Insightful)

    by dgp ( 11045 ) on Saturday June 23, 2007 @08:01PM (#19624421) Journal
    this makes no sense.
    if i sell a virtual item for USD, that is income and it is already taxed.
    stocks in a company are 'virtual' and existing in a 'computer simulation'.
    non-physical items are nothing new.

    the other interpretation is impossibly ludicrous which is to tax items created
    and sold in-game with no real-world value. if thats the case then they must
    collect the taxes in the form of in-world items.

    • Re: (Score:2)

      by mark-t ( 151149 )
      Well it's not quite fair to say they have no real world value... if they are valuable to somebody, then they have that measure of real-world value.

      What's absurd, however, is to tax items that are, when all is said and done, fictional. Regardless of whether these items are worth any real money to anyone or not. You may as well put a person in a higher tax bracket just because he _imagines_ winning the lottery.

    • Re: (Score:2)

      by ect5150 ( 700619 )

      if i sell a virtual item for USD, that is income and it is already taxed.
      Guess what! If you own a furniture store, make chairs and sell them, chances are you have to collect sales tax, wouldn't you? And guess what! You still have to pay income tax on the cash you just made. No one said taxes made sense (er, should that be that politicians make good decisions?).

  • The simple solution (Score:5, Insightful)

    by jonwil ( 467024 ) on Saturday June 23, 2007 @08:33PM (#19624571)
    Tax anytime real world money is exchanged for virtual goods.

    If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.

    If I give Linden Labs 100 L$ and get $50 back, I would be required to declare that $50 as income for tax purposes.
    • Money markets dont operate like this, you wouldnt be taxed every time you change currency.
      Change some euros to usd back to euros and get taxed twice? No it doesn't work that way.

      I pay monthly to secondlife, after awhile I have virtual linden money built up, I cash it out, and I'm taxed AGAIN? Nonsense.

      We pay way too much in taxes, and all this talk about how to get MORE/NEW taxes is absurd. How about some financial responsibility and a balanced budget before those fuckers in washington try to take anymore
      • I suspect money markets don't work that way because you're converting real money into real money, so there is no net profit.

        When LL gets money from you, they are taking a profit. When you get money from them, you are effectively taking a profit (maybe keep records of what you put in, and show that you made no profit?) ... unless they want to become a bank, in which case there are a whole other can of worms.

      • Re: (Score:2)

        by phorm ( 591458 )
        That applies to currently. In the case of games, yes it is an in-game currency, but effectively it functions more like goods/services when converting into real world dollars.

        However, it's still not that simple. If I have to claim the $50 in gamebux that I made farming gold, or whatever, does that mean I can deduct the cost of the following:

        The game
        The subscription (to WOW or whatever)
        The internet connection
        The PC used to access the internet

        In other businesses, those might be viable expenses dependi

    • Re: (Score:2, Informative)

      by thedohman ( 932417 )

      Tax anytime real world money is exchanged for virtual goods.

      If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.

      This is already the case. It is income. It must be declared.

      If I give Linden Labs 100 L$ and get $50 back, I would be required to declare that $50 as income for tax purposes.

      Possibly. (do you mean US$? if L$ no income has actually been made... unless they are collecting in-world)
      Hobby Expenses may be used to offset Hobby Income, so for the casual gamer (or, Second Lifer, rather) as long as you get back less than you put into it, there is no gain. But hobby still must be reported. You simply report the hobby expenses as well.

      And I don't think they are really referring to WoW type items, are they? TFA did

  • Taxing "Virtual Goods"? I'm all for this. (Score:3, Funny)

    by krunk7 ( 748055 ) on Saturday June 23, 2007 @08:55PM (#19624689)
    As long as I can pay with virtual money.
  • I'll start paying taxes for virtual goods when my character can vote.

    - RG>

  • Logistical Nightmare (Score:3, Insightful)

    by db32 ( 862117 ) on Saturday June 23, 2007 @09:52PM (#19625039) Journal
    Ok so 1 Million gil in FFXI on server X = $30, but on server Y = $25. So how do they even begin to figure out the value to tax at? Multiply this out by every online game and every server and you end up with a logistical nightmare of trying to figure out how to tax it. So, not that it would stop them, but it kinda puts them in a situation of spending $1000 to tax you $10.

    The other side to this, is that unless you deal with non IT managers and such you will probably never understand. It isn't that they are that greedy trying to come up with inventive ways of taxing you. Its that this kind of shit honestly makes sense to them. I spent 45 minutes the other day trying to explain why we couldn't make something happen, and I wasn't using technical stuff. I was drawing big multicolored circles to show that the two networks in question are not connected and the traffic cannot just go between them just because each network happened to have a computer in the same room as the other. They assume that all the computers are magically connected because they are networked. On top of this they frequently believe they are being lied to by IT because IT just doesn't want to do it, and not that IT is actually telling them it just can't work that way. There is absolutely no concept, nor any desire to learn even the fundamental workings of IT. Look at Sen "internet tubes" he wasn't being intentionally stupid...he really believes that insanity..and because anyone correcting him would be opposing his ideology on the subject he would just assume they are lying to him.
  • This just in, Baseball fans...

    You will now be charged for each run your hometown team scores. Cities with two teams may select which team they prefer the next time they file their 1040.
    (Exception: Residents of Chicago choosing the White Sox will be arrested for tax evasion.)
  • I'm making 4B ISK a month in Ishtar and Deimos sales in Eve Online. I'll need to up my research and development costs, donate my common loot to noob players and the various acadamies, list my bad debt to friends who consistently borrow 100M isk here and there for ships and modules -- so that I can get better tax breaks.

    I wonder if that 100M isk in Liquor I bought in Amarr space, only to find out its contraband there is tax deductable?

    Lets see, I think I can sell Senator Hillary some shares in my corp for

  • Seriously. What is a virtual good? A poem? A news article from Reuters? A short fiction story? Some 3d models of a car? Some 3d models of a car produced by a stock 3d image firm and then sold to a movie producer? Do we define a virtual good simply as bits and bytes that can only exist within a certain software program (i.e. a sword in Warcraft) and cannot easily "leave" that environment? Does this cover CAD files? It seems like the government simply wants to tax money transfers, which is historically what t

    • Re: (Score:2)

      by PhxBlue ( 562201 )

      Seriously. What is a virtual good? A poem? A news article from Reuters? A short fiction story?

      Not even. All of the above items have a real-world value: you buy books of short stories and poetry, and you likewise buy newspapers that run Reuters stories. The newspapers, in turn, pay Reuters for the right to run the stories in the first place.

      A "virtual good," as best I understand it, is something that has no real-world counterpart. If I view a poem online, I can print it and have a real poem. If my

  • Oregon Trail (Score:3, Funny)

    by tillerman35 ( 763054 ) on Monday June 25, 2007 @07:46AM (#19634427)
    It's Apr 15, 1837
    You have 14 oxen
    Your water barrels are 12% full
    You have 2.3 days of rations
    You have $43
    You have traveled 1349 miles
    (H)unt (T)rade (G)o (P)ay Taxes
    >G

    It's Apr 16, 1837
    You have 15 oxen
    Your water barrels are 8% full
    You have 1.3 days of rations
    You have $43
    You have traveled 1378 miles
    There is a warrant out for your arrest for tax evasion.
    (H)unt (T)rade (G)o (P)ay Taxes
    >

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