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How Long Till Virtual Currency Taxation?
GameDaily has a piece on the thorny issue of taxing virtual currency. From the article: "The current tax law has a clause, #525 to be exact, entitled 'Taxable and Nontaxable Income.' This verbose, meandering clause describes all manner of abstract (legal, illegal and otherwise) means by which you can earn income. Some of these obscurities can only be taxed by the speculative and vague term, 'fair market value.' ... This clause also includes a statement about goods acquired through barter or won (prizes or cash) in a game. Technically speaking this means those 'earnings' are taxable the very moment someone comes into possession of them, regardless as to whether or not they are sold for money. While no one knows the exact worth of all the virtual assets floating around the MMO gaming-verse, estimates for the sale of these goods range as high as $880 million a year. Step back and think about that for a minute... EIGHT HUNDRED AND EIGHTY MILLION! That's a crapload of real world money! Money made during what can be considered the infancy of the genre. Can you imagine how exponentially greater this amount will be in a few short years? "
Taxing in-game earnings has come up before and it'll come up again. In the U.S., the Internal Revenue Service will eventually take notice of the phenomena when someone who makes lots of real-world money by selling virtual goods gets audited by an ambitous Revenue Agent. Until then, unless you're actually converting virtual goods into real greenbacks, there's not much to say on the subject. Any scaremongering about taxable events occurring inside a game is just FUD. It may be fun to talk about, but I notice that no one has yet made the news after obtaining a private letter ruling. Until someone sparks a written determination from the IRS, this is really a non-issue. Someday it'll be an issue, but not for a while.
You slay some MMO monster, and it drops a small pile of gold, jewels, and several IRS forms for you to fill in.
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Al Capone was not allowed, by law, to sell bootleg liquor. He was, however, legally required to pay taxes on the income. He failed to do so, and went to prison for tax evasion...
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The government is entitled to take whatever they please as long as they can write it into law and enforce it.
Do not confuse 'right and wrong' or 'justice' with 'law'.
Job? I don't have time to get a job! Who will sit around and bitch about being broke and unemployed then?
In most MMOs there is no transaction. The service contract clearly states that all items remain property of the service provider. Because the items cannot be traded for real money they have no value.
Justice is the sheep getting arrested while an impartial judge declares the vote void.