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

IRS can't withstand virtual reality

[MSTCrow5429]

The IRS only exists in the real world. It should stay there. Otherwise, it could cause a reality breach, and soon find itself the target of thousands of nuclear warheads, tens of thousands of orcs, millions of heavily armed commandos, and a giant green pulsating penis.

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.

Re:I can't wait for taxation

[im_thatoneguy]

Or an even better solution.

The IRS can charge me taxes in WOW items. But I can defend it using WOW laws.

So the IRS agent must catch me in a raid and take my items by force. Because if I'm in a WOW world I'm going to fight by WOW rules and kick his sorry tax collecting ass.

Just think how much more interesting collecting a 400 gold piece tax will become when you can draw a sword and protect your property. Of course the IRS raiding parties will be top level well orchestrated teams working in concert across Azeroth it will add a whole new level of excitement every february for most players. The IRS would also probably add bounties for top
level characters leading to an interesting new dynamic of payed free agents for whom money is on the line.

Orrrr... if you sell your gold you report your "Other Income" like you're legally obligated right now. But that would be far less exciting.

*thatoneguy does not play WOW nor has ever played WOW. However adding IRS agents as a force might... just might convince him to open an account.

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

[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.