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Taxing Virtual Gaming Assets
rijit writes " It appears very likely that taxation of online games assets is inevitable. Quote: '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.' "
Since they are taxing virtual goods, we'll pay with virtual money.
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If that is the case, will they soon be taxing player earnings from board games as well?
Undetectable Steganography? Yep, there's an app fo
If they want to tax virtual assets then they should also accept virtual money to be used for tax payments.
Also, do players actually own the virtual assets? Because aas far as I can tell it's the game operator that actually owns them since they can always take those assets away from the player (for example by cancelling their account).
Paying taxes on virtual goods that are exchanged for real money... That I can understand.
Paying taxes on virtual goods where you don't exchange for real money is stupid.
What, are they going to start looking through my character's inventory, evaluating how much my +10 Sword of Uberness is worth?
I'm not sure how they can do this. MMORPGs generaly have a clause in the EULA stating that all virtual goods belong to them and have no intrinsic value. If the government decides that they do in fact have value, what happens when a server goes down just after you recieved a valuable item and you are rolled back to before you got it? Can you sue the game's owner for the value of the item? Can these games survive if a hardware failure could result in massive lawsuits against them?
Thrall for Senate from the great state of Durotar!
Politicians are like diapers - they should be changed frequently and for the same reasons.
If I understand the article correctly, assets gained in a game would be taxable, even if they are never converted into "real" money. If I had a Second Life business that made 1 million Linden Dollars in a year, then I would be taxed at whatever the U.S. Dollar to Linden Dollar rate is, even if I never take the "money" out of Second Life. To me this is ridiculous -- that would be like me being required to pay taxes on properties won in a Monopoly Game. I may own the whole board, but that does not translate to any wealth in real life.
A better example might be the stock market. Stock in XYZ company that I bought for $10,000 may be worth $100,000 today, but I am only taxed on those "gains" if I sell the stock. After all, who is to say that the stock won't be worth $5,000, or even nothing if the company goes belly up. I think the same should apply with game worlds -- as long as the "money" stays in the game world it should not be taxable, but once the "money" is converted to real money or "real" goods and services, then tax is due. After all, if I have a million Linden dollars in Second Life and the Linden would go out of business (not saying that this is likely, but just as an example), then my million Linden dollars would be a valuable as Enron stock.
I can understand taxing businesses in these worlds that make "real" money, but I think it is a real slippery slope taxing "game" money made in an online world unless the profits are taken outside of the game world.
Beware of Sleestak
Your character will be transferred from your originating game to the federal pound-me-in-the-ass prison game for a 6 month subscription. Unfortunately, the conjugal visit expansion will not be available anytime soon.
Every single MMOPRG states in its own EULA that the virtual goods received in game are their own property. Now, even if they can't stop all E-bay auctions, web sites selling currency or characters it doesn't change the fact that the sellers do not own the property to begin with. If anything, its trafficing in stolen goods. The EULA loans you the virtual item for gameplay then you go and sell it for real world currency? Tax the sell, not the game company so those people who do not sell it don't have to pay it. Even in some states illegal drugs are taxable which is enforced on top of a fine in some cases.
BS. Nowhere in the article does it say anything about the IRS actually trying to do this. No its this Miller guy (who we've heard from before) who insists that its going to happen "real soon now" (tm). Um no. If such a thing really did come to pass it would be held up in the courts for years because the game companies would fight it. Why? Because taxes already cost a lot of time and money. For something that is so overtly illegal for the government to do, they'd be stupid not to fight it.
... and CNET fed him.
This Miller guy is nothing but a troll
The Anti-Blog
The thing is, in the real world those things are taxed--when they are converted to actual cash. It's called "Capital Gains". The whole point is to take into account the variable nature of value in price fluxuating commodity goods.
If you buy 1,000 shares of stock for one penny each, and those 1,000 shares zip up to 5,000 dollars a piece, you don't owe a dime of tax (unless you receive dividends). If they drop back down to 1 cent each, and you sell, you owe tax based on the amount of money you made when converting the shares back to cash, which, in this case, would be 10.00.
You do NOT owe money based on how much that stock was worth at it's peak, because you didn't sell it at that value, and it would be grossly unfair to tax you based on the 5,000 dollar a share value, when you sold at 1 penny a share...That'd be on the order of a million dollars tax owed on a ten dollar sale.
Since WoW gold, etc, is valued at different values on different servers, and since that value fluxuates on a daily basis, it would seem to be impossible for the IRS to tax "gains" of WoW gold/items that have not been converted to actual currency...At what value would they fix those assets? It's be like taxing your penny stock at the 5,000 dollar mark...You don't have that money, and there is no guarantee that you'll ever have that money, so how can they tax it?
Now, if you sold gold/items/characters, that would be completely taxable, but I wouldn't think it would even fall under capital gains, but rather unreported non-work income, just like any other money gained from where people don't do your tax witholding for you.
Just stupid.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
Lot of people think income taxes are stupid...Mostly they are people who makes lots of money.
The alternative to income taxes would be federal sales tax, which is generally considered to put an undue tax burden on people who don't make a lot of money...eg, the rich man and the poor man buy a loaf of bread, and the 30 cents tax on the bread that goes to the Fed means nothing to the rich man, but means a lot to the poor man.
I suppose that you could add heavy taxes on luxury goods to "even out" the tax burden, but that's not exactly fair to the middle class (my new flat screen is gonna cost WHAT?!), and it puts luxury goods completely out of reach for poorer families.
Taxes are there to provide services for the whole of the population, whether it's paying for the military to protect our borders, and the police to protect our homes, or paying to clean up toxic waste spills, or paying for the interstate system, etc. People who demand "a la carte" government services always annoy the crap out of me, because they're always the people who refuse to see the point in anything that doesn't benefit them in a big tangible sort of way.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.