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Congress to Revisit Virtual Goods Taxation

Zonk posted more than 5 years ago | from the rollercoaster-of-anti-fun dept.

Role Playing (Games) 205

News.com has the word that congress is set to re-visit taxing virtual goods, a concept they shelved a while back in order to consider the matter more fully. That's given the Congress' Joint Economic Committee time to come to a decision about what exactly the value of virtual goods means for players and game-makers. An economist with the group told CNet to expect their report sometime next month. "What that report will say is unknown, as the committee has kept entirely quiet about its thoughts. However, it's clear that something will happen. 'Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues,' [senior economist Dan] Miller, who is a fan of virtual worlds and economies, told CNET News.com in December. 'So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.'"

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205 comments

Live with it... (3, Insightful)

creimer (824291) | more than 5 years ago | (#19623991)

Even in the virtual world, you have death and taxes.

Huge penis fail;ure (-1, Troll)

Anonymous Coward | more than 6 years ago | (#19624051)

In your poants [goatse.cz]

Can I pay for virtual goods (4, Insightful)

Jeremiah Cornelius (137) | more than 6 years ago | (#19624393)

in Monopoly money?

Or are they going to tax me for my hotel on Park Place too?

This is the kind of shit that Tories were shot for in 1776. Seems ripe enough time again.

Re:Can I pay for virtual goods (1)

tickbox (945624) | more than 6 years ago | (#19624653)

I suppose you could if you could find someone willing to pay for it with real money like they will for currency in some virtual worlds...

Re:Live with it... (5, Funny)

spirality (188417) | more than 6 years ago | (#19624149)

Really though can't the government just but out and leave things alone once in a while?

I think President Reagan said it best:
"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

Re:Live with it... (-1, Troll)

EugeneK (50783) | more than 6 years ago | (#19624413)

You left out the part where he said "if it's a piece of shit that costs billions of dollars and is made by defense contractors, run up a huge deficit to pay for it."

Re:Live with it... (1)

digitalunity (19107) | more than 6 years ago | (#19624495)

So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.

Translation: We don't want to get left out of this valuable market that needs taxation.

Doesn't look like much has changed since Reagan was around.

Re:Live with it... (4, Funny)

RealGrouchy (943109) | more than 6 years ago | (#19624797)

"...And if it stops moving, subsidize it."

So that's why politicians are always voting themselves pay raises!

- RG>

Re:Live with it... (4, Funny)

edwardpickman (965122) | more than 6 years ago | (#19624863)

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

I take it a dead body rolling downhill would be taxed, regulated and subsidized and in some states allowed to vote.

Re:Live with it... (0)

Anonymous Coward | more than 6 years ago | (#19624657)

If they want to tax virtual (ie. intangible, nonexistent) items, I'll just pay them with my vast resources of virtual (ie. intangible, nonexistent) money.

Seriously, only a madman would even conceive of such an idea. Personally I say put every single person who is involved with this into an insane asylum and throw away the key.

Why not do it yourself? (3, Insightful)

MSTCrow5429 (642744) | more than 5 years ago | (#19623995)

If you're going to tax virtual items, why not just use the approach used to eBay, in which you are responsible for tracking and calculating your taxable burden, and reporting it on your tax return? Of course, almost no one will do this, but people have a habit of not paying taxes for what they don't want or need, or view as illegitimate. Which is something the government should have to deal with in a more civilized fashion.

Re:Why not do it yourself? (4, Insightful)

fishthegeek (943099) | more than 6 years ago | (#19624115)

You kind of answered your own question. People do not honestly report income from those sales. What is the American state or federal government to do when the game is sponsored on the intratubes by a foreign company? This isn't a very practical idea at all. The value of a virtual piece of property is only extant when there is a population willing to pay real currency for it, and by the nature of the tubes that population might only exist for the lifespan of an African fruit fly! Unless the government is going to get fully into banking and force everyone to receive funds directly through the central bank and assess taxes there this is really a no starter.

Flat/Fair tax (1, Insightful)

daeg (828071) | more than 5 years ago | (#19624019)

Luckily, FairTax would abolish the idea of taxing virtual economies altogether, at least from what I've read and understand. Only services and first-hand goods are taxed, used items are not. Since you never purchased the virtual items to begin with, there is nothing to tax.

One small question arises from companies like Sony and SecondLife that sell virtual goods. Obviousy your monthly access fee would be taxed (recall that under FairTax, income is not taxed, only spending, so it's simply moving your tax due to your spending instead of income).

fairtax.org [fairtax.org]

Re:Flat/Fair tax (-1, Redundant)

Billly Gates (198444) | more than 6 years ago | (#19624143)

Fair tax is anything but fair and is very regressive giving hte rich big breaks at the expense of the poor and our economy. A 30% tax would cause a second great depression as income would drop for the rich who own businesses who need revenue for sales.

Re:Flat/Fair tax (4, Informative)

daeg (828071) | more than 6 years ago | (#19624257)

If the rich don't spend any money, sure, they get a break. But what rich person doesn't spend a lot of money? Sure, they save a lot of money (that's how a lot of them get rich), but they also spend a lot of money.

Remember, savings help the economy, too. Savings are reinvested in economic growth.

FairTax does target some individuals aggressively, sure. But so does our tax system now. Pardon me if I weep for a handful of wealthy people that don't pay any tax now that suddenly will have to pay taxes.

I'd probably pay more in FairTax than I would under Income Taxes, yet I still support FairTax. With FairTax, I can directly control my taxation through spending. Politicians will be unable to alter the taxation rate without it being highly visible. If the tax rate went from 23% to 24%, EVERYONE would see it on EVERY receipt. Right now they can hide tax increases in all sorts of places while simultaneously throwing money back as "tax refunds".

Re:Flat/Fair tax (1)

blindd0t (855876) | more than 6 years ago | (#19624695)

But what rich person doesn't spend a lot of money?

The ones that are as wealthy as they are because of what seems like a mental disorder. I know a multi-millionaire who strongly refused to purchase non-generic ketchup at the grocery store because it would have cost $0.06 more. It's strange, but this type of person gathers so much money and refuses to spend much more than the minimum necessary to survive, and does not even enjoy the money he or she saved. I'm no millionaire myself, but I honestly thought the person was joking at first. Once I realized it was no joke, Chris Rock's "good lord that's a lot o' money!" bit already came into mind and I had to fight off a giggle. For a little more depth, the house was a comfortable size (1 room for each person living there), but nearly every piece of furniture and clothing came from a local thrift store. So in summary, they were quite wealthy, yet lived as if it were really that necessary to stretch each and every penny to the greatest extent possible. Of the wealthy population, however, these folks definitely appear to be an exception.

I just realized this is a bit off-topic from the post, but you asked (though it was probably a rhetorical question), and I already finished typing my reply. :-)

Re:Flat/Fair tax (1)

hedwards (940851) | more than 6 years ago | (#19625119)

We already have that here in WA and a half dozen other states. Trust me it doesn't work out very well at all. Sales taxes are by there very nature a poor idea. They slow sales, cost jobs and every time one needs to fund another service the amount of total revenue decreases somewhat due to the additional burden.

And that is at 9%, imagine taking that up to 24% or higher like your suggesting, and nobody would buy anything. People would go back to making things themselves because it would cost so much to purchase things. They would have plenty of time to do it, because the number of jobs would decline sharply.

Income taxes actually encourage people to spend money, because the money spent doesn't incur any sort of tax. Income is not discouraged within reason either as long as the sales tax is at a reasonable level.

This sort of proposal really only benefits the wealthy, as they don't spend the huge portion of their income that the lower classes do.

But sort of back on topic, the taxation of in game goods will never happen. Any individual selling online game items for cash is already liable for income tax as it is. In the same way that an individual taking bribes or being a prostitute has to pay tax on the earnings. Any income that is not specifically excluded in the code is subject to taxation. This isn't anything new. In game items don't have an inherent value, until they are exchanged for real world currency or favors, barter is also subject to taxation as well.

Re:Flat/Fair tax (1)

sam_handelman (519767) | more than 6 years ago | (#19624169)

And if we return to feudalism, you'll just pay a portion of the crops you grow to your immediate liege, with no taxes for other economic activity at all - which is a somewhat more likely scenario than a flat tax becoming law, so we should carefully consider the legal ramifications of online farming.

  On a real world note, if they are taking advantage of public resources or institutions to make a real-world profit, they should be required to pay towards the upkeep of those resources or institutions. I have no idea if anyone is making real-world money besides the companies selling subscription fees (I know people are supposed to be making real money in Second Life, but is this actually happening?), but if they are, they should, on principle, pay taxes on it.

Re:Flat/Fair tax (1)

cgenman (325138) | more than 6 years ago | (#19624405)

Flat tax A: would remove our taxtion classificaitons, ensuring that those least able to pay (such as single mothers earning 20,000 or less) will have taxation burden thrust upon them. B: it would ensure than those who make money through investments rather than their efforts will have a minimal tax burden (as you so aptly point out elsewhere, you don't become rich by spending 100% of your income, but if you're poor you most definitely do). C: It would remove mitigating taxation factors, such as having children, having a failing business, investing in education, etc.

A flat tax would simplify paperwork greatly. But unfortunatley it would also shift a major tax burden onto those least able to pay, and while increasing the wealth of the leisure class.

Remember, this is not a way to collect more money or reduce government spending. It is simply a balance change which shifts sources of income from one area to another. Unfortunatley, those who would bear the brunt would be those least able to pay.

Re:Flat/Fair tax (1)

beyondkaoru (1008447) | more than 6 years ago | (#19624501)

personally, i think a national sales tax (say, 10%) combined with a national income tax (which is only applied to the really high income brackets) would make sense. the taxes paid by the poor are not much higher, and income taxes are placed where they are most effective. i think i remember seeing somewhere that 80% of income taxes come from the top 10% of americans by income (my memory is pretty crappy so i could be talking out of my ass).

anyway, moving taxes to the sales side would also make a lot of people shut up on the illegal immigrant issues -- they'd be paying taxes just like every other blue collar worker simply by going about their daily life. so the people who for whatever reason don't like them will have one less thing to complain about.

another option is to have an income tax which is flat minus a constant; for a purely flat income tax, we set some % of income that you have to give to the government. so, you make x, you must pay (p/100)x to the gov or whatever. the 'negative income tax' is if you make x, you must pay (p/100)x-k to the government. if that turns out to be negative, hey, you're being subsidised :) . it has the benefits of being nice to poor people (which is the general motivation for our complicated tax system, though it certainly is has plenty of (possibly intentional) loopholes), as well as being both simple and continuous, in that there aren't [brackets].

Re:Flat/Fair tax (2, Informative)

CastrTroy (595695) | more than 6 years ago | (#19624731)

In Canada income tax works kind of like this. Take whatever you make. The first 9000 doesn't get taxed. First 35000 gets taxed at 15.5%. Then there's 22% tax on the portion between 35K and 75K. 26% on the part between 75K and 120K, and 29% on the part over 120K. That's federal, provincial is the same system, but lower percentages. So, the poor end up paying less tax. Then there's provincial and federal sales tax, but those don't get charged on "essentials" like groceries. So again, people who only buy what they need to survive, and not many luxuries pay less tax. I think this works out pretty well. I'm not sure how different this is from the american tax system, but mostly I understand how this works, and I'm pretty happy with it.

Re:Flat/Fair tax (1)

Firethorn (177587) | more than 6 years ago | (#19624645)

Cgenman, this happens whenever somebody mentions fairtax [fairtax.org]. I'd recommend reading the link.

Synopsis though is that all citizens and legal residents would get a prebate for the taxes on poverty level spending. So your single mother, unless she's making a lot more than poverty level, wouldn't be paying more in taxes. Her kids would count in the prebate amounts.

As for making money from investments, sure, that wouldn't be taxed, but neither is income, so it doesn't really matter. The rich guys will pay their taxes when they buy a lexus or BMW, go out to eat in the fru-fru restraunt, etc...

Re:Flat/Fair tax (2, Insightful)

bdjacobson (1094909) | more than 6 years ago | (#19624411)

Luckily, FairTax would abolish the idea of taxing virtual economies altogether, at least from what I've read and understand. Only services and first-hand goods are taxed, used items are not. Since you never purchased the virtual items to begin with, there is nothing to tax.

One small question arises from companies like Sony and SecondLife that sell virtual goods. Obviousy your monthly access fee would be taxed (recall that under FairTax, income is not taxed, only spending, so it's simply moving your tax due to your spending instead of income).

fairtax.org [fairtax.org]
I don't like fair tax. A 40% tax when you're making $20k can be the difference between having enough money to rent and not being able to afford it. A 40% tax at $200k means you might not be able to afford that nice lakehouse and boat on which you will sip fine alcoholic beverages. Because the economy isn't fair, and encourages you to exploit anything and everything to the detriment of everyone else, and because you benefit more from a stables society when you're making $200k/year than when you're only making $20k/year, taxes should be a higher percentage if your pay is higher. Not enough to remove the incentive to move up in income, but enough so that the tax reflects the benefit you gain from a secure country.

We need a system that taxes wealth (when your money works for you), but not income (still have to work for your money).

Re:Flat/Fair tax (1)

Dantu (840928) | more than 6 years ago | (#19624565)

I have to admit I haven't heard of Fair Tax, but here in Canada we have seen the notion of a flat income tax proposed. The trick to it however is that you have a relatively high personal exemption limit (around 10k/person). The idea is that the personal exemption is around the amount of money you would need to pay rent and put food on the table, so you only pay tax on the money that you are using to live more comfortably, not the money you need to 'get by'.

As I recall, the actual plan proposed was poo-pooed by social groups, though it would have saved families earning under about $35k/year quite a bit of money.

Re:Flat/Fair tax (1)

larry bagina (561269) | more than 6 years ago | (#19624601)

We need a system that taxes wealth (when your money works for you), but not income (still have to work for your money).

While I'm not "rich", I have saved money over the years and invested it in some smart/lucky stock picks (buying Apple at $10/share, for example). Why is saving money a bad thing? Would you be happier if I had spent it on plasma TVs, a PS3 and an expansive car?

Re:Flat/Fair tax (1)

bdjacobson (1094909) | more than 6 years ago | (#19624713)

We need a system that taxes wealth (when your money works for you), but not income (still have to work for your money).

 


While I'm not "rich", I have saved money over the years and invested it in some smart/lucky stock picks (buying Apple at $10/share, for example). Why is saving money a bad thing? Would you be happier if I had spent it on plasma TVs, a PS3 and an expansive car?

The idea I'm fond of is you take away anything beyond, say, $100k/year that your stocks are making for you. As for "big wins" perhaps there could be some two/three year buffer, as in if the average over the last 3 years that your stocks grew was $100k, then this year you're taxed on whatever that difference is. This wouldn't keep you from building enough money to retire on ($100k/year is plenty for anyone to live on), but it would keep you from taking home $200m retirement packages; packages that don't reflect your use to society. Keep in mind you could still be working making up to $100k/year on top of that $100k/year interest you're earning.

Re:Flat/Fair tax (1)

Firethorn (177587) | more than 6 years ago | (#19624707)

Why do you say 40%? Fairtax pegs it at 29% (charged as a traditional sales tax), then turns around and sends everybody a check for ~$300(including kids) a month. Rent and used goods aren't charged a sales tax.

taxes should be a higher percentage if your pay is higher. Not enough to remove the incentive to move up in income, but enough so that the tax reflects the benefit you gain from a secure country.

Why should it be, other than liberal/socialist ideas of fairness? I happen to believe that we shouldn't load down our best revenue producers(high salary people) to the point that they decide that it's not worth it working any more when Uncle Sam is going to take 70% of their earnings and turn around and shoot golf for three months out of the year.

It also doesn't cover the fact that the richest portion of our population is quite capable of avoiding most of the taxes through creative interpretations of the tax code as determined by dozens of tax lawyers and accountants.

I also believe that the average family should be able to file their own taxes; I find the fact that there's a whole industry devoted to filing taxes to be abhorrent. It's a non-productive waste.

Re:Flat/Fair tax (1)

Stephenmg (265369) | more than 6 years ago | (#19625163)

Also keep in mind that all items have a "hidden" tax currently included in the cost. Those taxes would go away and competition would lower prices.

Awesome (4, Funny)

CrazyJim1 (809850) | more than 6 years ago | (#19624063)

I can't wait to do tax write offs for giving gold out to newbies.

Re:Awesome (1)

Original Replica (908688) | more than 6 years ago | (#19624081)

What about my donated services as a healer? I rez people who aren't in my team all the time. And what is a life worth?

Re:Awesome (1)

Criterion (51515) | more than 6 years ago | (#19624371)

Ok, you should be able to deduct the cost of decay on your chip for the rez, but then keep track of your skill gains, as that would be your income from that. xD

But the have to reconginized charities. (1)

khasim (1285) | more than 6 years ago | (#19624095)

But it would be interesting to see some players form a non-profit company whose only assets were in-game.

Does the government REALLY understand what it's getting into? I don't think so.

What about theft? Or ganking? If it is taxable, does the loss of it reduce your taxes?

Re:But the have to reconginized charities. (1)

sheetsda (230887) | more than 6 years ago | (#19625133)

If you read the EULAs of games like MMOs very closely (second life is the exception rather than the rule) you will find that the company that produces the game "owns" all the items on all the characters on all the servers. This is part of the reason why they ban the selling of virtual goods for real cash. You can't sell something you don't own. So where does that leave the IRS? Sure, money changed hands and they can tax that as income, but can they tax virtual goods that didn't change hands? Sounds like a property tax, so Blizzard for example is suddenly going to find it very expensive to be spawning epic items in every instance because they are high value items. There are two solutions: spawn very few of them to limit the number that are taxed or spawn so many of them as to make them worthless. Where does that leave the game? If they tax virtual goods at all it also raises all sorts of interesting questions about game companies having financial liability if their databases go offline or lose data, and being a GM in such a game is suddenly going to be a government regulated and heavily scrutinized position. Suppose a company running a game files bankruptcy; do their servers, with millions of dollars in virtual items get auctioned off at the value of the virtual items? Not bloody likely. Suppose a dupe hack is found for the game, are we going to have an RIAA-esque gestapo going after people who ended up with dupes in the interest of propping up a doomed business model? Since the company in charge of these games has absolute and irrevocable control over the supply of these goods, can the company be sued as a monopoly if it violates some awkwardly applicable law?

Re:But the have to reconginized charities. (1)

jkabbe (631234) | more than 6 years ago | (#19625221)

The fact that the income came from illegal activities didn't stop Al Capone from going to jail, and it won't help you either. The IRS doesn't care how you made the money, just the fact that you made it.

Big deal (4, Funny)

weave (48069) | more than 6 years ago | (#19624093)

I'll just remit my copper to the IRS via in-game mail. They can use the gold they collect to buy more Fel Iron shells my engineer makes for shipment to the troops in Iraq. That will drive the cost sky high. I'll be rich and can get that elite flying mount soon!

So (1)

Billly Gates (198444) | more than 6 years ago | (#19624127)

How does virtual goods and gold from wow translate into real money for the IRS?

Seems silly and a waste of time. People do not use virtual gold on wow for real currencies though the spammers and pharmers seem to make money off it.

Until virtual currencies become worth accepting on the financial market then its a waste of time.

Re:So (1)

gronofer (838299) | more than 6 years ago | (#19624671)

How does virtual goods and gold from wow translate into real money for the IRS?
Personally I think it should depend on whether the virtual goods and gold are convertible to US dollars or not. If not, it's just a game and shouldn't be taxed. However if they are easily converted to US dollars, I can't see a good reason why they shouldn't be treated like any other foreign currency/assets.

Re:So (1)

Kadin2048 (468275) | more than 6 years ago | (#19625527)

Taxing virtual goods is stupid.

Virtual goods should be treated just like stock, or any other valuable non-currency good that you might invest in.

When you're just holding on to it, and not doing anything with it, there's no tax. But when you go to sell it, then you are responsible for paying tax on that income. (In order to avoid paying tax on the entire amount raised by the sale, you can go back and establish the original price you paid for the good, and only pay tax on the money you made -- this is simple capital gains.)

This avoids having to try and determine the value of things when you aren't ready to sell them, when they're just sitting around and being held as an investment. The IRS doesn't give a shit what the price of the stock you own fluctuated to while you were holding onto it -- they only care about two things: what it cost to buy it originally, and what you got when you turned around and sold it. The delta between those two is what you're responsible for paying tax on.

There's no reason to do anything different with 'virtual property.' Treat it just like any other kind of non-physical investment.

Digital music/movies (0)

Anonymous Coward | more than 6 years ago | (#19624171)

So, would this include digital music/movies, or are those already taxed?

Its really really simple.... (3, Insightful)

3seas (184403) | more than 6 years ago | (#19624179)

....pay the taxes in virtual money/value and let the government trade it in for something they can use, like virtual weapons of mass destruction or virtual anti-terrorist defence, or for the more domestic spending, virtual road repair, virtual food stamps, virtual housing for the poor, etc...

Re:Its really really simple.... (3, Funny)

Original Replica (908688) | more than 6 years ago | (#19624307)

So when I sign up for a game I will have to play on a pre-taxed server, where everone's gold intake is lowered by 25% and the difference is deposited into a IRS avatar account. The in-game economy will be effected 0% and Uncle Sam will lose money paying someone to spam the trade channels with "BUY 5mil CREDITS ONLY $24 @ IRS.gov/mmorpg"

Re:Its really really simple.... (1)

FunWithKnives (775464) | more than 6 years ago | (#19624729)

They're already doing quite well with virtual WMDs and virtual terrorism defense. I just wish that it really was virtual money that they were using for all of it.

The problem is that 100g has real value when sold (1)

patio11 (857072) | more than 6 years ago | (#19625273)

Think of what would happen if the government instituted a pithy 5% consumption tax on Azeroth. Across all US servers. And then opened an office to sell the resulting gold for US dollars. That would be an entirely real headache for an entirely real several-hundred-million-dollars.

(If this strikes you as unlikely, replace it with them taxing gold-for-dollars transactions, as they already theoretically do. All they need is a way to actually discover that the transactions are taking place, in the same way that your bank is required to report to the government any year they pay you more than $10 in dividends.)

Good things like eulas geting ruled unfair may... (1)

Joe The Dragon (967727) | more than 6 years ago | (#19624213)

come from this as a big pro. As people will not want to pay tax for in game gold and other things that eula says is = to $0 usd if not. People who just play the game with out trading in game stuff for cash will quit the game.

Second Life eula says that in game things do have cash value so they may be in for some big time IRS work load also they may also have to crack down in game Casinos and other things that may not be lawful in some states / areas.

Greedy selfish SOBs... (0)

Anonymous Coward | more than 6 years ago | (#19624231)

I'll bet next they'll want to have a breathing tax, so they can tax people's AIR. Oh, wait... they're already trying to do that with the global carbon tax.

On the bright side, at least there's no doubt as to the state of cynicism.

Baranaby The Bear's my name (-1, Troll)

Anonymous Coward | more than 6 years ago | (#19624243)

Barnaby The Bear's my name, never call me Jack or James, I will sing my way to fame, Barnaby the Bear's my name. Birds taught me to sing, when they took me to their king, first I had to fly, in the sky so high so high, so high so high so high, so - if you want to sing this way, think of what you'd like to say, add a tune and you will see, just how easy it can be. Treacle pudding, fish and chips, fizzy drinks and liquorice, flowers, rivers, sand and sea, snowflakes and the stars are free. La la la la la, la la la la la la la, la la la la la la la, la la la la la la la la la la la la la, so - Barnaby The Bear's my name, never call me Jack or James, I will sing my way to fame, Barnaby the Bear's my name. Thunder, thunder, thundercats, Ho! Thundercats are on the move, Thundercats are loose. Feel the magic, hear the roar, Thundercats are loose. Thunder, thunder, thunder, Thundercats! Thunder, thunder, thunder, Thundercats! Thunder, thunder, thunder, Thundercats! Thunder, thunder, thunder, Thundercats! Thundercats! Top Cat! The most effectual Top Cat! Who's intellectual close friends get to call him T.C., providing it's with dignity. Top Cat! The indisputable leader of the gang. He's the boss, he's a pip, he's the championship. He's the most tip top, Top Cat. Hong Kong Phooey, number one super guy. Hong Kong Phooey, quicker than the human eye. He's got style, a groovy style, and a car that just won't stop. When the going gets tough, he's really rough, with a Hong Kong Phooey chop (Hi-Ya!). Hong Kong Phooey, number one super guy. Hong Kong Phooey, quicker than the human eye. Hong Kong Phooey, he's fan-riffic! I never spend much time in school but I taught ladies plenty. It's true I hire my body out for pay, hey hey. I've gotten burned over Cheryl Tiegs, blown up for Raquel Welch. But when I end up in the hay it's only hay, hey hey. I might jump an open drawbridge, or Tarzan from a vine. 'Cause I'm the unknown stuntman that makes Eastwood look so fine. Mutley, you snickering, floppy eared hound. When courage is needed, you're never around. Those medals you wear on your moth-eaten chest should be there for bungling at which you are best. So, stop that pigeon, stop that pigeon, stop that pigeon, stop that pigeon, stop that pigeon, stop that pigeon, stop that pigeon. Howwww! Nab him, jab him, tab him, grab him, stop that pigeon now. Hong Kong Phooey, number one super guy. Hong Kong Phooey, quicker than the human eye. He's got style, a groovy style, and a car that just won't stop. When the going gets tough, he's really rough, with a Hong Kong Phooey chop (Hi-Ya!). Hong Kong Phooey, number one super guy. Hong Kong Phooey, quicker than the human eye. Hong Kong Phooey, he's fan-riffic! Just the good ol' boys, never meanin' no harm. Beats all you've ever saw, been in trouble with the law since the day they was born. Straight'nin' the curve, flat'nin' the hills. Someday the mountain might get 'em, but the law never will. Makin' their way, the only way they know how, that's just a little bit more than the law will allow. Just good ol' boys, wouldn't change if they could, fightin' the system like a true modern day Robin Hood. Ten years ago a crack commando unit was sent to prison by a military court for a crime they didn't commit. These men promptly escaped from a maximum security stockade to the Los Angeles underground. Today, still wanted by the government, they survive as soldiers of fortune. If you have a problem and no one else can help, and if you can find them, maybe you can hire the A-team. Thunder, thunder, thundercats, Ho! Thundercats are on the move, Thundercats are loose. Feel the magic, hear the roar, Thundercats are loose. Thunder, thunder, thunder, Thundercats! Thunder, thunder, thunder, Thundercats! Thunder, thunder, thunder, Thundercats! Thunder, thunder, thunder, Thundercats! Thundercats! One for all and all for one, Muskehounds are always ready. One for all and all for one, helping everybody. One for all and all for one, it's a pretty story. Sharing everything with fun, that's the way to be. One for all and all for one, Muskehounds are always ready. One for all and all for one, helping everybody. One for all and all for one, can sound pretty corny. If you've got a problem chum, think how it could be. This is my boss, Jonathan Hart, a self-made millionaire, he's quite a guy. This is Mrs H., she's gorgeous, she's one lady who knows how to take care of herself. By the way, my name is Max. I take care of both of them, which ain't easy, 'cause when they met it was MURDER! Ulysses, Ulysses - Soaring through all the galaxies. In search of Earth, flying in to the night. Ulysses, Ulysses - Fighting evil and tyranny, with all his power, and with all of his might. Ulysses - no-one else can do the things you do. Ulysses - like a bolt of thunder from the blue. Ulysses - always fighting all the evil forces bringing peace and justice to all. Top Cat! The most effectual Top Cat! Who's intellectual close friends get to call him T.C., providing it's with dignity. Top Cat! The indisputable leader of the gang. He's the boss, he's a pip, he's the championship. He's the most tip top, Top Cat. There's a voice that keeps on calling me. Down the road, that's where I'll always be. Every stop I make, I make a new friend. Can't stay for long, just turn around and I'm gone again. Maybe tomorrow, I'll want to settle down, Until tomorrow, I'll just keep moving on. [goat.cx]

Sounds fair... (1)

stdarg (456557) | more than 6 years ago | (#19624255)

... if we start getting tax revenue from intellectual property too. Mickey Mouse is probably worth $1 billion, let's charge Disney 2.5% a year until it's in the public domain.

This is proof that income tax is a fraud (5, Insightful)

JoeShmoe (90109) | more than 6 years ago | (#19624305)


So, not only is the IRS adamant about taxing "all income" ...they are now stretching it beyond the boundaries of absurdity.

Basically, what is happening here is that someone is saying "I have 1,000,000 hippo bucks" and the IRS is trying to establish some metric of determining how much a "hippo buck" is worth in US dollars so they can tax it. OK, Slashdot: I'm offering those 1,000,000 hippo bucks for sale...who's going to buy them from me and establish the official conversion rate?

Oh wait, nobody because even a billion "hippo bucks" aren't worth anything. So then if I give someone 10,000 of my hippo bucks, has a transaction occured? Choose your own adventure:

Answer YES: Then guess f'ing what...every game of Monopoly is income and so, in aggregate, the population of the US probably owes trillions in unreported income to the IRS for all the games of Monopoly that have been played since its creation.

Answer NO: Then you're instantly smarter than our entire Congress and IRS because you realize that ITS A FREAKIN GAME. As soon as the game is dissolve, said "income" evaporates into thin air. That's the point. Sure, MMORPGs may run a lot longer than your typical game of Monopoly but guess what...if Sony went out of business and Everquest turned off its servers, then what would be left? Nothing but memories and bragging rights...which is all that's really left after a game of Monopoly.

Virtual taxes should be paid in virtual dollars. All the servers and the space the occupy, you know...reality, are already taxed at every possible level. Otherwise, what's to stop the IRS from taxing your score in Pac-Man? Couldn't that spot on the Hi-Score list have value and be auctioned on eBay? (L@@K YOUR INITIALS ON TOP!!! NO RESERVE!) Or how about those packets currently flowing into my computer...don't those have value? If someone idiot buys a single packet from me for $1000, then we are all screwed. ...

As a closing note, I'm uncomfortable with how easily my analogy about fictional money and invented wealth matches a description of the current US currency system. Hrm. Maybe the entire US banking system is already an MMORPG.

-JoeShmoe
.

Re:This is proof that income tax is a fraud (4, Insightful)

Aladrin (926209) | more than 6 years ago | (#19624573)

Your newly created Hippo bucks probably are worthless. But 'gold' in WoW is not. The proof is that businesses exist only to sell it for real money. http://www.google.com/search?hl=en&q=wow%20gold&bt nG=Google+Search [google.com]

According to the sites I just went to, 1000 gold is worth $60-100. So it does indeed have value.

The problem is not taxing someone's income, it's trying to tax it before it becomes income. If the person sells that gold on EBay (or otherwise for real USD), it -should- be taxed. If they merely hold it on their character and do nothing, there should be no tax. Oddly enough, the current tax laws -should- cover this already. If people aren't paying the tax, that's the government's fault for not cracking down on tax evasion.

Blizzard has a very real problem if the government starts to tax the virtual goods directly. That means that the characters, items, and gold on their servers have real value, and if they take that value from someone, or deprive them of access to it, they can be sued. That means that if someone cancels their account, they have to either continue to provide access to it, or pay them out. And if there's a data failure, they have to reimburse everyone. (Luckily, they could do so in WoW Gold, which they can make freely.)

Blizzard does have one ace up their sleeve for this fight, though. They have already made it clear that selling gold for real USD is against the TOS and is not allowed. This is quite clearly saying that it has no real value.

At any rate, the summary is deliberately starting a ruckus. They have said they are looking into it finally, not that they favor taxing it or any such thing. At -some- point they had to meet, even if only to say 'not taxable' and lay it to rest.

Re:This is proof that income tax is a fraud (1)

JoeShmoe (90109) | more than 6 years ago | (#19625215)

That was my point. How does changing one form of goods and service into another count as "income"? It's an exchange. I'm trading piece of paper worth X into bits worth Y. Neither of them has any inherient value beyond what is promised by the writing on the paper or the function of the bits. It's still not income.

I'm unaware of any taxes that apply to money changing. I'm sure there's service fees and what-not, but (I hope) that there's no tax that is collected just for changing dollars into pesos, pounds, or francs. If that is the case, there shouldn't be any tax that applies to changing them into WoW gold or "hippo bucks". We are talking about exchange rates and not income, that much seems painfully clear to me.

-JoeShmoe
.

Re:This is proof that income tax is a fraud (1)

Aladrin (926209) | more than 6 years ago | (#19625455)

If you want to treat WoW's gold as legal currency, it IS income as you are earning it, since it can be traded for real money.

If I work for room and board, instead of money, that's still income. The money just went directly towards room and board instead.

If I play WoW and earn 1000 gold, then sell it for $100, that's $100 worth of income. If I don't see it, it's still worth the same $100, even if I don't do the currency conversion.

If instead, you treat WoW gold as an object (the way real gold is treated, even though it -could- be treated as currency), the tax would be done on the sale of the goods, instead of the acquisition. No taxes would be applicable until real money is obtained.

Re:This is proof that income tax is a fraud (2, Interesting)

insignificant_wrangl (1060444) | more than 6 years ago | (#19624647)

O.k., lets take a deep breath. I don't like paying taxes either, but if you read the articles, you'll see that Miller is proposing taxing players who have accrued millions of real world dollars:

LaPiana said that there is little question that the transfer of such assets could be taxable, since it is property. However, he did say that the taxes would accrue only if the total value of the estate's assets, at the time of death, exceeded the limit set by the state in which the deceased had lived. In most cases, he said, that amount is $2 million, though some states, like New York and New Jersey, have lower limits.

There are not that many instances in which someone has that level of virtual assets, although the recent reports that Second Life land mogul Anshe Chung had amassed $1 million in virtual land and other holdings certainly suggest her heirs might have some interesting inheritance tax issues if she dies.

If people are selling virtual goods in real markets, then I don't see the big deal taxing them. Yes, sometimes that money goes to things we don't appreciate, but other times it goes to things like education, research, roads, and all that other fun stuff. And if we want the government to support issues such as net neutrality, then we're going to have to let them get their hands dirty. I do think its a bit funny that they can't understand how to craft sane intellectual property laws yet are ready to tackle virtual taxation, but this thread already has its share of bitchin' and moanin'.

Re:This is proof that income tax is a fraud (2, Insightful)

KiahZero (610862) | more than 6 years ago | (#19624679)

This post is more indicative of your ignorance than the ignorance of policy-makers. Then again, your subject line pretty much demonstrates that you have no idea what you're talking about.

The income in question isn't your virtual income, it's your real-world income that comes as a consequence of that virtual income. Unlike Monopoly money, you can sell your virtual currency for real money... that means that it has a real-world value. Even if you don't plan on selling your currency, it still has value because there's a market for it. If you did know what you were talking about, you would know that virtual currencies aren't a new thing... the IRS has dealt with the issue in the past when people created private bartering notes and exchanged those instead of U.S. currency. Despite being "funny money," those notes were nonetheless taxable income and needed to be declared.

A better comparison would be two poker websites. One is completely for fun; while you play for "Bucks," that money is completely fake and cannot be cashed out in any way. Another uses "PokerChips," which you can exchange for money at a fixed rate. It's clear that the first shouldn't be taxed... the "Bucks" have no real-world value. On the other hand, the second should certainly be taxed as income, as the "PokerChips" are simply a form of private currency. MMORPGs like WoW much more closely resemble the latter than the former, and there's really no question when it comes to SOE StationExchange-enabled games, where the selling of virtual property is explicitly allowed.

With that said, rather than directly taxing in-game income, it would make far more sense to only reinforce the necessity of paying income tax on the proceeds from sale of virtual goods (perhaps working with eBay and other common points of sale to catch tax cheats); to do otherwise would not only punish people who play the game for fun rather than for profit. It would also make for some rather odd tax deductions - if virtual currency is "income," every time one has to repair their equipment, they could write it off as a loss, and perhaps even use the game as a tax shelter.

Compare it to stocks... (1)

Kjella (173770) | more than 6 years ago | (#19624921)

If you replace "hippo bucks" with "hippo shares" then you have a similar, completely abstract currency. If they went bankrupt, there'd be nothing but sweet memory left of those stocks either. Yet somehow, we manage to set a market value to that. Deltas in that value are considered profits or losses. For 99% of us the value would go in zero anyway once you cancel your WoW account. Taxing people that make a real-world profit this way is hardly unreasonable, at least not anymore than any other income tax.

Blame the Democrat Congress, not the IRS (0)

Anonymous Coward | more than 6 years ago | (#19624957)

So, not only is the IRS adamant about taxing "all income" ...they are now stretching it beyond the boundaries of absurdity.


Just to put a point on that, the IRS is not autonomous; the IRS works at the bequest and guidance of Congress. Congress sets the policy, the IRS executes it. So the Democrats, through the appropriate committee, have asked the IRS to re-examine the taxation of virtual goods, and the IRS is doing so... don't blame the messenger.

Regardless, what's with all the complaining about taxation? I thought all the libe... uh, I mean "progressives", here on /. just loved the idea of higher taxes. Why did everyone suddenly turn RedState? Oh, wait. I get it. You only support higher taxes when someone else pays them, right? But now that the camel has stuck it's proverbial nose into your gaming tent, you're not so happy. Welcome to The Real World, kids.

Growth rates of 10% to 15% a month (0)

Anonymous Coward | more than 6 years ago | (#19624313)

Apparently stupidity and greed among politicians are growing at the same rate. The only fair (as in "screw everybody the same") tax is on real income earned with virtual goods. Everything else is just dollar signs in politicians eyes.

What are they thinking? (2, Insightful)

penguinbrat (711309) | more than 6 years ago | (#19624339)

Seriously, it real life - the taxes go for things that effect us physically or that the entities we pay provide a service we use even if indirectly.

In real life taxes pay for...

1) roads
2) traffic control (stop signs, lights, etc...)
3) financial assistance (welfare, medicare, etc..)
4) law enforcement
5) military (protection of way of life)
6) etc...

I used to play WoW, so I'll use that as my example...
1) environment - developed and controlled by game maker
2) traffic control - disigned/mantained by your ISP
3) law enforcement - in game police, gamers paid by developer to help keep things under control - GM's
4) military protection - the particular guild your in, you pay them taxes via items found, helping noobs, etc...

Everything is covered and we pay either the ISP or the game maker (Blizzard in this case) and the government does not provide anything as far as I can tell. If they were to start collecting taxes what could they possibly offer that's not already covered?

Taxes: [wikipedia.org] Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Most modern governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities. Colonial and moderning states have also used cash taxes to draw or force reluctant subsistence producers into cash economies.

The above is all covered by the developer, if it even exists - again what could they possibly offer? It's not like they can re-write the game engine to add an educational system if doesn't already exist...

Re:What are they thinking? (1)

ahodgson (74077) | more than 6 years ago | (#19624387)

You forgot: wars against oil-producing countries, bridges to nowhere, etc. They always need more money.

Re:What are they thinking? (1)

penguinbrat (711309) | more than 6 years ago | (#19624509)

wars against oil-producing countries: In theory at least it is to keep the cost of oil down - that is the excuse at least that we would benefit from

bridges to nowhere: They are still physically in existence so we can use them if we wanted to turn around or something, or take pictures or something just as pointless - or even bitch about wasting money


Again - what could they provide in a virtual word created by someone else, even if it was just something to bitch about? Are they going to start creating laws that provide probation/jail time for camping noobies? In a very real way - the government creates the world we live in - they are not creating or controlling the virtual words, another government is (IE: Blizzard) that we already pay taxes to - the taxation on play time...

How do they have time...? (1)

Nom du Keyboard (633989) | more than 6 years ago | (#19624341)

With Illegal Immigration on the table, and a war in Iraq, along with their ratings being the lowest ever, how do they have time to even consider messing in our lives otherwise? Or do they plan to ship all the illegals to Second Life as a solution that both sides will buy?

Let's translate this BS-heavy synopsis (2, Insightful)

Mr. Underbridge (666784) | more than 6 years ago | (#19624345)

Let's translate this damned thing into reality:

congress is set to re-visit taxing virtual goods, a concept they shelved a while back in order to consider the matter more fully.

Congress, as a whole, doesn't fucking care.

'Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues,'

I extrapolate exponential trends, showing my poor grasp of statistics. I also make baseless speculations sound important by name-dropping governmental agencies.

Miller, who is a fan of virtual worlds and economies, told CNET News.com in December. 'So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way.'"

Somebody with way too much time on his hands takes this shit way too seriously.

So let me get this straight.... (1)

mark-t (151149) | more than 6 years ago | (#19624363)

If I were an American, and a fictional story about me winning a hundred million dollars got published in a magazine, the IRS would expect to be able to actually tax me on those fictional winnings?

What goes on in these games is not real... it is fiction. And somehow the IRS figures its not only entitled to a portion of what you actually make, but also a portion of what you might have _imagined_ yourself making?

Uhmm... wow. Just wow.

Are Linden Dollars lawful currency? (1)

Nom du Keyboard (633989) | more than 6 years ago | (#19624373)

Are Linden Dollars even lawful currency? Once only silver and gold were considered lawful. Now days Federal Reserve Notes qualify, since people tried to avoid paying taxes on "non-lawful" earnings.

Also, are these earnings "overseas" earnings that might avoid taxation. After all, show me just where in the USA my SL property is located.

Most of all, will Linden Research turn over records to the IRS that they would need in order to track users down. And can you hide yourself through foreign proxies? After all, try as they might, they've not shutdown Internet gambling yet.

Re:Are Linden Dollars lawful currency? (1)

gronofer (838299) | more than 6 years ago | (#19624699)

Is the Euro even a lawful currency? Not in the USA, nobody is required to accept it in payment. However it's easily converted to US dollars, and if you have income in Euro but resident in the USA, you will most likely be taxed on the income (depending on US tax law.)

Re:Are Linden Dollars lawful currency? (1)

gronofer (838299) | more than 6 years ago | (#19624719)

Are Linden Dollars even lawful currency? Once only silver and gold were considered lawful. Now days Federal Reserve Notes qualify, since people tried to avoid paying taxes on "non-lawful" earnings. Also, are these earnings "overseas" earnings that might avoid taxation. After all, show me just where in the USA my SL property is located.
Is the Euro even a lawful currency? Not in the USA, nobody is required to accept it in payment. However it's easily converted to US dollars, and if you have income in Euro but resident in the USA, you will most likely be taxed on the income (depending on US tax law.)

income is already taxed (3, Insightful)

dgp (11045) | more than 6 years ago | (#19624421)

this makes no sense.
if i sell a virtual item for USD, that is income and it is already taxed.
stocks in a company are 'virtual' and existing in a 'computer simulation'.
non-physical items are nothing new.

the other interpretation is impossibly ludicrous which is to tax items created
and sold in-game with no real-world value. if thats the case then they must
collect the taxes in the form of in-world items.

Re:income is already taxed (1)

mark-t (151149) | more than 6 years ago | (#19624899)

Well it's not quite fair to say they have no real world value... if they are valuable to somebody, then they have that measure of real-world value.

What's absurd, however, is to tax items that are, when all is said and done, fictional. Regardless of whether these items are worth any real money to anyone or not. You may as well put a person in a higher tax bracket just because he _imagines_ winning the lottery.

How about In-Game rules? (1)

FoxNSox (998422) | more than 6 years ago | (#19624435)

As many of you know, many of the games, for which these virtual traders trade their goods, have an explicit no Real World trading rule imposed on the economy. My question is: Will congress take into consideration this very important fact? Imposing a tax on illicit trading ingame is like taxing the drug trade. It shouldn't be happening in the first place!

What's next? (1)

sits69 (1111621) | more than 6 years ago | (#19624437)

"And in other news today, a new tax levy of 10% has left table-top gamers hoping to 'roll 18s' instead."

Its not just dumb . . . (1)

paleo2002 (1079697) | more than 6 years ago | (#19624529)

. . . it'll have all sorts of unintended consequences too.

What virtual property is the government going to tax exactly? The few MMO's that offer legitimate currency exchange, such as Second LIfe and Entropia, convert your virtual goods and income into real world income. This real, legal currency is then taxed as miscellaneous income. If you make more than X dollars a year this way (or through eBay, etc.) then you pay taxes. So, the government already taxes income from virtual sources.

Then there's the vast illegitimate virtual currency exchange market that Congress and the media gets its "billion-dollar-a-year business" numbers from. Sure, WoW gold may sell for 500/$25 but it does so in violation of Blizzard's EULA which is a binding legal agreement. So, if the feds start taxing the illegitimate purchase of virtual currency, either a) Sale of virtual goods and currency becomes legal and Blizzard, Sony, etc. can't place restrictions or b) All forms of piracy or "black market" business become taxable since there's no difference between selling gold that Blizzard has the legal rights to and selling copies of movies or music that Sony, etc. have the legal rights to.

Taxation of virtual goods will have all sorts of interesting legitimizing consequences. Virtual worlds may end up declaring themselves states or countries for tax purposes. But, then, that wouldn't be unprecedented. The US started out as an investment venture and revenue source which later became a country in order to avoid taxes.

Re:Its not just dumb . . . (0)

Anonymous Coward | more than 6 years ago | (#19624691)

Lets see the Supreme court has defined income as "Assessitions to wealth (you got richer), clearly realized (you can measure it with 100% accuracy in REAL money (greenbacks)) and over which the taxpayer has complete dominion (nobody else can tell you what to do with it). Virtual income fails on probably all 3 counts. Can you spend the "money" on anything in the real world? I don't think so but I'll concede that point. Is it "clearly realized" - only if you turn it into real greenbacks or some other tangible property like say a real (as opposed to virtual) car. I think it fails this test. Over which the taxpayer has complete dominion - it fails this test miserably because if the game goes away (lets say host server owner shuts the game down) the "money" goes away too. What I am wondering is if the government wants to tax virtual income and get paid in virtual currency do they maybe just fight virtual wars? Maybe it's not such a bad idea!

Re:Its not just dumb . . . (1)

Vegeta99 (219501) | more than 6 years ago | (#19624759)

Ever heard of the Marihuana Tax Act? Leary vs. United States?

They'll tax something illegal if they want to.

Re:Its not just dumb . . . (0)

Anonymous Coward | more than 6 years ago | (#19625535)

IIRC we had a case here in Texas some years back. Guy got busted selling pot. Said pot had a state marijuana tax stamp affixed to every bag. State had intended the marijuana tax law as a double whammy. Get busted selling pot without the tax stamp and they'll also charge you with failing to pay taxes on it. Guy argued in court that since he had paid tax on the pot it was legal. IIRC judge ruled in the guy's favor. Along the lines of "He's paid his taxes on it, you took the tax money so now you can't bust him for selling the pot."

The simple solution (5, Insightful)

jonwil (467024) | more than 6 years ago | (#19624571)

Tax anytime real world money is exchanged for virtual goods.

If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.

If I give Linden Labs 100 L$ and get $50 back, I would be required to declare that $50 as income for tax purposes.

Re:The simple solution (1)

BrookHarty (9119) | more than 6 years ago | (#19624683)

Money markets dont operate like this, you wouldnt be taxed every time you change currency.
Change some euros to usd back to euros and get taxed twice? No it doesn't work that way.

I pay monthly to secondlife, after awhile I have virtual linden money built up, I cash it out, and I'm taxed AGAIN? Nonsense.

We pay way too much in taxes, and all this talk about how to get MORE/NEW taxes is absurd. How about some financial responsibility and a balanced budget before those fuckers in washington try to take anymore of our money.

Misandry - News for men [misandry.us]

Re:The simple solution (1)

TheSkyIsPurple (901118) | more than 6 years ago | (#19624941)

I suspect money markets don't work that way because you're converting real money into real money, so there is no net profit.

When LL gets money from you, they are taking a profit. When you get money from them, you are effectively taking a profit (maybe keep records of what you put in, and show that you made no profit?) ... unless they want to become a bank, in which case there are a whole other can of worms.

Re:The simple solution (2, Informative)

thedohman (932417) | more than 6 years ago | (#19625281)

Tax anytime real world money is exchanged for virtual goods.

If I sell you an item in a game for $50, I would be required to declare that $50 as income for tax purposes.

This is already the case. It is income. It must be declared.

If I give Linden Labs 100 L$ and get $50 back, I would be required to declare that $50 as income for tax purposes.

Possibly. (do you mean US$? if L$ no income has actually been made... unless they are collecting in-world)
Hobby Expenses may be used to offset Hobby Income, so for the casual gamer (or, Second Lifer, rather) as long as you get back less than you put into it, there is no gain. But hobby still must be reported. You simply report the hobby expenses as well.

And I don't think they are really referring to WoW type items, are they? TFA did not say, but some of the "related" articles (which I did not read) may have. If so, then the need to collect it in WoW gold, or whatever the in game currency would be if the currency is declared by the publisher to have no value.

Real world money or real world goods (0)

Anonymous Coward | more than 6 years ago | (#19625499)

Swaps of real world goods should also be classified as income.

If I sell you an item in a game for Starbucks coupons, or for $50 of instant noodles that should also be declared as income.

Ring ring... (1)

hallux-s (1010313) | more than 6 years ago | (#19624609)

"Mr Jones? Max Smith, Internal Revenue Service calling. Seems to us here at the IRS that there is a problem with your 2007 Form 1040. You failed to report the income from the sales of 12 residential dwellings, and the profits from the subsequent erection of three hotels in their places, located, according to our records, on Illinois, Indiana, and Kentucky Avenues. Additionally, you collected $1,600 in fees from a person named Gorge Ricardo for a hotel you owned on Boardwalk Ave., on four separate occasions, which he claimed as a business expense. Taxes and penalties assessed will total approximately $18,274.89. You may round this down to the next lower dollar if you compute these figures in whole dollars only.

We expect to receive a check in payment by August 15th, or you may expect to be levied additional fees, or possibly having a warrant issued for your arrest. Nobody wants that to happen, so... would you like to copy down the address you can send your check in to?"

~hal

Re:Ring ring... GIVE THEM NOTHING TO TAX (0)

Anonymous Coward | more than 6 years ago | (#19624805)

If anyone was looking for a way to show these morons for the fools they are this is it!!!

I want to hear them explain how this is any diferent than taxing monopoly money!!! I mean really, how is this justified. They are not talking about taxing the REAL money you made from selling a character or what ever on ebay- they are talking about virtual money!!!

So what is the exchaneg rate, becuase I dont know if I can pay the tax on 1,000,000,000 virtual dollars. Oh, they must have way to take that 1,000,000,000 dollars and convert it to US Dollars right, then I can pay the tax no problem.

Sure take 66%- I'm completely ok with that- I think 333,000,000 income is ok

So lets every one be clear on this, we need to pay real taxes for virtual money.

These people need to go. They need to all go in 2008- they need to understand that they represent the people and the people DO NOT ACCEPT THIS BULLSHIT

In case you didnt here, the US congress as a whole got a 14% approval rating this week. Do you know why- because they are unqualified to do their job.

Its time to make clear to these people where the power really is.

If this goes through, we all need to go on strike Atlas Shrugged style. People that think these laws are jsutified are the enemy and they should be treated as such.

GIVE THEM NOTHING TO TAX -- RON PAUL WE NEED YOU TAKE THIS ISSUE -- SHOW THE PEOPLE WHATS WRONG WITH THE SYSTEM -- THIS IS YOUR GOLDEN SOUND BITE MOMENT!!! YOU WERE AWESOME ON DAILY SHOW -- DO THE SHOW AGAIN WITH THIS TOPIC!!! PLEASE

Welcome Democratically Controlled Congress (0)

Anonymous Coward | more than 6 years ago | (#19624755)

Welcome the new Democratically Controlled Congress

No taxation without representations (2, Interesting)

RealGrouchy (943109) | more than 6 years ago | (#19624849)

I'll start paying taxes for virtual goods when my character can vote.

- RG>

RON PAUL WE NEED YOU TO TAKE THIS ISSUE (0, Informative)

Anonymous Coward | more than 6 years ago | (#19624865)

Ron Paul we need you take this issue -- show the people whats wrong with the system

this is your golden sound bite moment!!!

you were awesome on daily show -- do the show again with this topic!!! please

How do you tax something you do not own? (1)

bakura121 (1117149) | more than 6 years ago | (#19624891)

This is going to be a slippery slope. Players don't own the virtual property. The game companies do. Even if you pay someone real cash for in-game currency or items, it still belongs to the game company. How can you be taxed for something that you do not own?

To Tax What No Man Has Taxed Before..... (1)

IHC Navistar (967161) | more than 6 years ago | (#19624971)

Just when you thought that Big Brother had put a tax on everything, they do one better:

Now they want to tax things that don't exist.

No problem here ... (1)

slashdotlurker (1113853) | more than 6 years ago | (#19625035)

As long as taxes for virtual goods and services are virtual in themselves. In which case, I might end up voting for some of my virtual representatives some day.

Logistical Nightmare (2, Insightful)

db32 (862117) | more than 6 years ago | (#19625039)

Ok so 1 Million gil in FFXI on server X = $30, but on server Y = $25. So how do they even begin to figure out the value to tax at? Multiply this out by every online game and every server and you end up with a logistical nightmare of trying to figure out how to tax it. So, not that it would stop them, but it kinda puts them in a situation of spending $1000 to tax you $10.

The other side to this, is that unless you deal with non IT managers and such you will probably never understand. It isn't that they are that greedy trying to come up with inventive ways of taxing you. Its that this kind of shit honestly makes sense to them. I spent 45 minutes the other day trying to explain why we couldn't make something happen, and I wasn't using technical stuff. I was drawing big multicolored circles to show that the two networks in question are not connected and the traffic cannot just go between them just because each network happened to have a computer in the same room as the other. They assume that all the computers are magically connected because they are networked. On top of this they frequently believe they are being lied to by IT because IT just doesn't want to do it, and not that IT is actually telling them it just can't work that way. There is absolutely no concept, nor any desire to learn even the fundamental workings of IT. Look at Sen "internet tubes" he wasn't being intentionally stupid...he really believes that insanity..and because anyone correcting him would be opposing his ideology on the subject he would just assume they are lying to him.

This just in, baseball fans... (1)

Alzheimers (467217) | more than 6 years ago | (#19625041)

This just in, Baseball fans...

You will now be charged for each run your hometown team scores. Cities with two teams may select which team they prefer the next time they file their 1040.
(Exception: Residents of Chicago choosing the White Sox will be arrested for tax evasion.)

No taxation without representation! (0)

Anonymous Coward | more than 6 years ago | (#19625073)

If they start taxing virtual transactions, then my dwarf gets a seat in congress.

Uh.... (1)

xRobx (795021) | more than 6 years ago | (#19625095)

They can't tax virtual goods. Congress is being retarded by wasting tax money even looking into it.

What if a big giant . . . (1)

fotoguzzi (230256) | more than 6 years ago | (#19625183)

. . . asteroid made out of gold lands gently in the middle of the game and causes gold futures to collapse. And (as others have pointed out), what if a big giant gold asteroid hits the game servers?

Why this is insane (0)

Anonymous Coward | more than 6 years ago | (#19625185)

"You loot the goblin corpse and find 3000 gold coins. Minus tax you now have collected 2950 gold coins."

Why not tax gold farmers? (1)

erareno (1103509) | more than 6 years ago | (#19625227)

I really think the only thing that should be taxed (if it all) is gold farming, which is taxed (sometimes).

Really, these are real people selling a good/service that people are willing to pay real money for, so I have no problem with that being taxed.

I don't think taxing anything else would really work out. (Tax Blizzard because they have a server up that happens to have virtual goods? Wouldn't that basically be a server tax?)

/rant

ObPython (1)

Indigo (2453) | more than 6 years ago | (#19625361)

"You know, we already tax most of the things we do for pleasure... drinking, smoking. What if we taxed... you know, thingy?" "Thingy?" "Yes, you know, thingy." "I'm afraid I don't. Could you please be more explicit?" " You know - thingy!"

Try this (0)

Anonymous Coward | more than 6 years ago | (#19625479)

They can suck my virtual cock.
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