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

Re:Bigger Problems Then Taxes

[ILuvRamen]

wrong! The reason I can't sell my in game currency on ebay is because it's just data on the server and the game company still owns it. That's the legal reason why they can and did pull my auctions from ebay! So if I don't own the money, none of my "income" is MY income. They should make up their damn minds I think. You can't say you don't own it to sell it but you do own it to tax it. I don't care either way because if I can start selling gold again then hurray and who cares if they tax it cuz I'll still turn a profit and if they decide the other way, I can't sell my gold but they also can't tax it so I win that way too.

Re:Bigger Problems Then Taxes

[LordKazan]

Your mouth is talking, and inaccurate numbers are spewing out of it