IRS Eyeballing Virtual World Tax Policies

Kotaku points out a Washington Post report about this year's recommendations from the national taxpayer advocate (an official who suggests improvements and updates to the tax code) which include developing clearer protocols for reporting taxable income from virtual worlds. We've previously discussed the implementation of such policies in China. Quoting the report summary (PDF): "By one estimate, about $1 billion in real dollars changed hands in computer-based environments called 'virtual worlds' in 2005. ... IRS employees have been unable to respond to taxpayer inquiries about how to report transactions associated with them. Economic activities in virtual worlds may present an emerging area of tax noncompliance, in part because the IRS has not provided guidance about whether and how taxpayers should report such activities. To improve voluntary tax compliance, the National Taxpayer Advocate recommends that the IRS issue guidance addressing how taxpayers should report economic activities in virtual worlds."

Comments

Bigger Problems Then Taxes

[KronosReaver]

If your generating enough income from "virtual worlds" that it needs to be taxed...

Well, taxes are probably the LEAST of your problems.

Re:Bigger Problems Then Taxes

[drik00]

Not even that. The average tax-payer in the US is hit for 35-40% of earned income. How much more do they need before they realize that they're wasting money. Most of the US tax dollar is already going to non-military spending. We're a federalist republic, the federal government SHOULDN'T be paying for every program, it should be up the states on anything other than a certain couple of programs.

J

Re:Bigger Problems Then Taxes

[Lulfas]

Well, newest chart I could find is http://www.taxfoundation.org/research/show/22685.html It shows that California (in 2005) paid $289b and received back $242b. $40billion clears up the deficit by more than double, I believe.

Re:feh

[palegray.net]

Yeah, I know those people cheat already, but why make it legal.

So, you're advocating continuing to screw the general public on taxes because you like having a legal basis to punish the wealthy for being wealthy?

I can't wait for taxation

[the_raptor]

Taxation of virtual worlds will mean players will have ownership over their accounts (currently trying to monetize your WoW assets is a bannable offence), and fraud and theft in virtual worlds will fall under standard criminal statutes.

Trying to enforce that mess will drain resources from trying to create copyright cops or other nonsense.

If this happens ...

[Aiml]

Can I write my WoW characters off as dependencies?

Re:feh

[QuoteMstr]

Where does the Constitution of any State guarantee the RIGHT to low cost public transportation, health care or schools?

The US constitution doesn't guarantee any of these things. It does, however, create a legislature empowered to raise funds and spend them for the general welfare. And as we live in a democracy, and the vast majority of us support the programs you mention, you're going to just have to suck it up. Or convince us to change our minds: good luck with that.

Re:feh

[jcr]

What's wrong with you? You're not part of the trust fund crowd. Why are you continuing to argue against your own interests?

That's the same line of bullshit that was used to sell us the income tax in the first place. The American people were promised that the federal income tax would only affect the top 1% of earners. Didn't work out that way, did it?

Every "soak the rich" scheme turns into a "soak everybody" scheme in a few years, because of the effects of the even more insidious mode of taxation, which is inflating the currency.

-jcr

Re:feh

[jcr]

And as we live in a democracy,

First of all, this isn't supposed to be a democracy, it's supposed to be a republic, and secondly, if you imagine that our government obeys the will of the people, you are sadly deluded.

the vast majority of us support the programs you mention

You're funny.

There was this little incident last year, in which our bought-and-paid-for legislators decided to hand some seven hundred billion dollars over to a bunch of incompetent speculators. This was done despite overwhelming disapproval by the public. In fact, that bitch who purports to represent me in the senate admitted that she had gotten a total of 91,000 calls on the matter, of which 85,000 were against, and she gave a snotty little lecture on the senate floor where she lied through her teeth and claimed that we didn't understand what they were doing.

-jcr

Re:feh

[TheLink]

Is she elected? If she is and is reelected in the next election, then the voters really don't know what they are doing ;).

Re:feh

[Attila Dimedici]

You do know that every member of the "trust fund" crowd I have ever heard speak on the subject has been in favor of increasing the tax rate on the highest income bracket. Do you know why that is? People who are members of the "trust fund" crowd don't have any "income": none of their money is taxed under income tax.