... Uncle sam may eventually want his share of it
http://news.com.com/Are+virtual+assets+taxable/2100-1043_3-6027212.html?tag=cd.lede
Personally, I think that Julian Dibbell is a ******* idiot for even bringing the subject up, not to mention he is a yantis wannabe, which makes him scum in my book. But anyways, now that people are looking at this, it may someday be an issue.
So how does this work? Is norrath, or Wowville, or whatever considered a different country? is it where the server resides? the client? Who would decide the value of this stuff anyways? And what gives the government the right to tax any of it?
I personally think eventually someone will wake up and go "that's a really ******* stupid idea, we're banishing you to mexico for suggesting it" but until then, it is something to ponder.
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article wrote:
Should online game players' assets--the weapons, characters, clothing and such--they've accumulated but not yet sold for real-world cash be taxable by the IRS?
There's little I can say that Castronova didn't get to already. The burden for reporting would be insane, not to mention that there would have to be some kind of rough equivalency or exchange rate set up between the major games. While FFXI reports in gil, EQ reports in plat, Eve Online reports in isk... we'd have to see those currencies added to the international currency markets before we could even begin trying to figure out how to tax transactions made in those denominations.
A new form of griefing could be mailing someone a bunch of in-game items and make them have to go through hell with the IRS!
Considering that all in-game items and money are property of the software companies (in the mmorpgs I've played anyway), I'd say this wouldn't work.
trickybeck wrote:
Considering that all in-game items and money are property of the software companies (in the mmorpgs I've played anyway), I'd say this wouldn't work.
I wonder about things like There/Second Life/Project Entropia would work, though.
Are the items still owned by the company, even though you can buy/sell them?
The internet is getting confusing. The lines blur.
The way the federal tax laws are now, there is nothing to even bother thinking about. They dont tax goods waiting to be sold, since everthing is based on gain. Having stuff in a bank is not a gain, nor is paying to play a game. But that little old lady having her neighbors kid mow her lawn better watch out, that is considered having a professional lawn service as a free gain and taxed.
There is also no monetary value in the MMO's, it is kind of hard to tax something that has no value. The biggest fear would be them taxing the service reasing the rates.
Now people selling stuff on the various sites should be taxed, since they are having financial gain. Those companies should be letting their records available for IRS inspection upon request.
That is one good thing about US tax law gifts are untaxed.
There is also no monetary value in the MMO's, it is kind of hard to tax something that has no value. The biggest fear would be them taxing the service reasing the rates.
Now people selling stuff on the various sites should be taxed, since they are having financial gain. Those companies should be letting their records available for IRS inspection upon request.
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A new form of griefing could be mailing someone a bunch of in-game items and make them have to go through hell with the IRS!
I hear the new EQ expansion will add a new class which could be the most fearsome and ruthless yet - called the Auditor.
Quote:
That is one good thing about US tax law gifts are untaxed.
Actually, any gift over 14k dollars in a one year period will be taxed. My wife and I learned this from our attorney when we were trying to figure out how to split up her inheritance between her brother and sister. She actually had to dis-inherit the total amount she wanted to give them, because inheritance money isn't taxed.
This wouldnt work. RMT breaks most ToS so it would make taxing difficult and the IRS can't touch my money anyway...
fhrugby wrote:
I hear the new EQ expansion will add a new class which could be the most fearsome and ruthless yet - called the Auditor.
NERF auditors!
dirges wrote:
Having stuff in a bank is not a gain, nor is paying to play a game.
Money in the bank suffers no tax, as it has already been taxed at several other points in the course of coming to you. Take payroll taxes as an example;
- Company produces a product
- Company sells a product, and sales tax is assessed on the buyer
- Company receives money, which is taxed at the corp level (ha)
- Company pays you, which is taxed as per income tax
- You go to spend part of that money, and pay a sales tax on what you buy
- You throw the money in the bank, where its safe.
Except it's not safe from taxes on any interest gained on the balance in your account, of course. They ***** us on that one, too.
dirges wrote:
There is also no monetary value in the MMO's, it is kind of hard to tax something that has no value. The biggest fear would be them taxing the service reasing the rates.
I was trying to think of examples where a tax is levied against the potential value of something that has not yet been sold. Property tax immediately came to mind. In theory property taxes help pay for community services like police and fire, but in practice the tax is assessed based on the value of your home, not on the cost of those services. If your home's value goes up, your property taxes follow suit. You need realize no gain to be eligible for this penalty.
I can't see it working in MMOs though, any more than I can see all Ebay transactions being taxed. At most I can see the government trying to force local sales taxes to be applied on a nation-wide level whenever products are purchased or sold anywhere, but they'll have a fine time trying to apply those same tax regulations to a purchase that occurs with virtual goods stored on an overseas server handled by a third party extra-national broker.
allenjj wrote:
Actually, any gift over 14k dollars in a one year period will be taxed. My wife and I learned this from our attorney when we were trying to figure out how to split up her inheritance between her brother and sister. She actually had to dis-inherit the total amount she wanted to give them, because inheritance money isn't taxed.
Also if you read here. It is the giver that is taxed as well, not the recipient So what I was replying to was true, who cares if they give you all that stuff it is free to you.
Quote:
No Tax on the Person Receiving your Gift or Estate
The person who receives your gift or your estate generally will not have to pay any gift tax or estate tax because of it. In addition, that person will not have to pay income tax on the value of the gift or inheritance received. NOTE: There are some technical applications for "Income in Respect of Decedent" under §691 that will have to be considered for income earned but not otherwise taxed prior to the date of death.
The person who receives your gift or your estate generally will not have to pay any gift tax or estate tax because of it. In addition, that person will not have to pay income tax on the value of the gift or inheritance received. NOTE: There are some technical applications for "Income in Respect of Decedent" under §691 that will have to be considered for income earned but not otherwise taxed prior to the date of death.
wingchild wrote:
dirges wrote:
--------------------------------------------------------------------------------
Having stuff in a bank is not a gain, nor is paying to play a game.
--------------------------------------------------------------------------------
Money in the bank suffers no tax, as it has already been taxed at several other points in the course of coming to you. Take payroll taxes as an example;
- Company produces a product
- Company sells a product, and sales tax is assessed on the buyer
- Company receives money, which is taxed at the corp level (ha)
- Company pays you, which is taxed as per income tax
- You go to spend part of that money, and pay a sales tax on what you buy
- You throw the money in the bank, where its safe.
Except it's not safe from taxes on any interest gained on the balance in your account, of course. They ***** us on that one, too.
--------------------------------------------------------------------------------
Having stuff in a bank is not a gain, nor is paying to play a game.
--------------------------------------------------------------------------------
Money in the bank suffers no tax, as it has already been taxed at several other points in the course of coming to you. Take payroll taxes as an example;
- Company produces a product
- Company sells a product, and sales tax is assessed on the buyer
- Company receives money, which is taxed at the corp level (ha)
- Company pays you, which is taxed as per income tax
- You go to spend part of that money, and pay a sales tax on what you buy
- You throw the money in the bank, where its safe.
Except it's not safe from taxes on any interest gained on the balance in your account, of course. They ***** us on that one, too.
Your property tax example is close to being the only possible way to work a MMO item tax, since property taxes are a screwy system anyway. Afterall they are more like a longterm veriable rate lease then a tax. The way land is we can own it, but not truly own it. But then again any company can totally ***** the evaluations by randomly changing the drops. If it is common, it isnt worth anything right?
Quote:
but they'll have a fine time trying to apply those same tax regulations to a purchase that occurs with virtual goods stored on an overseas server handled by a third party extra-national broker.
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