this is insane. A must read for all gamers!

FTA: "LaPiana said that there is little question that the transfer of such assets could be taxable, since it is property."

Sorry beaurocrats, this is incorrect. The TOS from every online game explicitly states that all game data does not belong to the user, but rather to the company running the game. The "property" if you want to call it that, is never owned by the user. The company has the right to revoke the right to use in game assets or suspend account activity at any time because of this. That's how/why they shut down ebay auctions and kick people off for cheating, griefing, etc.

GG lawmakers, you lose. Do better research next time.
 
Load of crap, thats like the people that said we'd all be riding personal jetpacks by the year 2000.
 
How can they Tax it if I never turn it into real world income?
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That's the key right there.

That's not to say that politicians won't try, but I think the EULA stuff where companies state that the player actually owns nothing is good coverage for the players.

I could see them really going for the item/account/goldsellers that are based in the US.

Personally, if I start getting tax forms from a gaming company for a game I play, I'll be sure to talk to the ACLU right off the bat. I never convert anything into real cash, and I'll be damned if I have to fill out forms for a hobby that doesn't actually make me any money. Between accounts and computer upgrades, it's not the cheapest hobby I've ever had.
 
herryoyo said:
Personally, if I start getting tax forms from a gaming company for a game I play, I'll be sure to talk to the ACLU right off the bat.
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LOL! The ACLU being against a tax. Thats a good one.

Well, all this just makes me glad I gave up MMOs. Still, I can imagine how amusing it would be.

Blizzard: We've enforced your tax in WoW. We've place your 1 billion gold pieces in an account for you spend at your leisure.

IRS: What are we supposed to do with this?!

Seriously, if they tax fake money, the tax should be paid in fake money.
 
herryoyo said:
I could see them really going for the item/account/goldsellers that are based in the US.
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These people should be paying taxes on this stuff already. Any sort of income is taxable, it doesn't matter how you earn it. I think this is what the lawmakers mean, they just don't understand what they're talking about (SURPRISE!). In that case, yeah make sure they pay their taxes, but don't tell us this has anything to do with video games.
 
Namork said:
Seriously, if they tax fake money, the tax should be paid in fake money.
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You know, those wendy's commercials valuing everything in frosties and jr bacon cheeseburgers might just turn out to be brilliant social commentary.
 
It's junk. Just as in-substantial as the "E-Mail postage" hoax that was floating around a few years back.
 
JBavousett said:
It's junk. Just as in-substantial as the "E-Mail postage" hoax that was floating around a few years back.
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what hoax, i get charged 2 cents for every email i send...
 
What a bunch of BS. It will *NEVER* happen. They can't tax virtual property or income because it doesn't exist. Why don't they start taxing my dreams? If I dream I win the lottery they should tax me for that income... it's the same thing, virtual income.
 
I agree that the EULA can protect us currently from this. But.... what if they force them to change the EULA under law? I mean they even state in many EULA's that they can change it whenever they want. Like WoW. YOu have to agree to it after every major update.

Now I can't see them charging people for looting up their t2 peices of armour that are BOP. I mean you're not even capable of making money from it.. UNLESS you vendor it for the gold then sell teh gold on ebay.. But how many farmers do u know raid night and day to get those peices of armour just to vendor them?
 
Dillirium said:
I agree that the EULA can protect us currently from this. But.... what if they force them to change the EULA under law? I mean they even state in many EULA's that they can change it whenever they want. Like WoW. YOu have to agree to it after every major update.

Now I can't see them charging people for looting up their t2 peices of armour that are BOP. I mean you're not even capable of making money from it.. UNLESS you vendor it for the gold then sell teh gold on ebay.. But how many farmers do u know raid night and day to get those peices of armour just to vendor them?
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the eula can only help, not hurt.
 
Dillirium said:
I agree that the EULA can protect us currently from this. But.... what if they force them to change the EULA under law? I mean they even state in many EULA's that they can change it whenever they want. Like WoW. YOu have to agree to it after every major update.

Now I can't see them charging people for looting up their t2 peices of armour that are BOP. I mean you're not even capable of making money from it.. UNLESS you vendor it for the gold then sell teh gold on ebay.. But how many farmers do u know raid night and day to get those peices of armour just to vendor them?
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In this scenario, the seller should already be theoretically paying taxes on that ebay transaction, because its income. Again, I don't see this as having anything to do with games, its really just that people are now making money playing them and these people don't understand that income is taxable.

I agree that they'd probably have to change the EULAs, but I don't see how they could ever do this. If you "own" that item, what happens if you tell blizzard that you want to store it offline, move it to another server, cash it out, etc? Wouldn't they be required to let you do that? I think second life gets by because you can convert the money directly to and from game income (btw I blame second life for all of this).

CodeX said:
They can't tax virtual property or income because it doesn't exist.
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Just because it doesn't tangibly exist doesn't mean you can't do things with it. Intellectual property and data can most certainly be protected or governed by laws, and rightfully so (we'd be in chaos if it weren't). Just food for thought.
 
They can tax my in-game property when I get my flying car and Hologram television.


JANE!!! STOP THIS CRAZY THING!
 
This thread should have been called a "MUST READ FOR MMOPRGERS" not for all gamers, I don't care about MMO games... doesn't affect me.

Misleading!
 
I have a mixed opinion on this:

I do think it's kind of crappy, but there are people in second life who make 6-figure incomes a year and live off of that. If they don't pay income taxes on that it's totally unfair to people who do pay income tax and make $20k a year working at Target.

I dunno, it's complicated, and I think it will happen eventually, but hopefully when it does go into effect it will be done so by people who understand this stuff.

I mean you shouldn't have to pay a tax when you like, get a good item drop in WoW or something, but I don't have a problem with taxes invovling real-world transactions. I mean if you pay a gold farmer real cash for some in-game gold, I don't see why that shouldn't be taxed. Granted, it's very difficult to enforce because I'm sure a lot of those transactions are international.

So I'm not sure what to think. A game like WoW should not be taxed, and selling of in-game items for real cash should lead to bannings, etc. (not sure if it is already). On the flipside you have Second Life, which is an attempt to create a virtual world. In which case I think it should be ok to sell in-game assets, but there should be some sort of tax involved there, if only to lessen the burden on other people. I'm personally annoyed that people in Second Life can make more money than I do, but then have the benefit of not being hit with income tax or anything for it.
 
This is bogus. First, as Spiff originally pointed out, everything on your WoW account and such is not owned by you, it's owned by the company who produces the game.

Second, there are so many transactions going on that I think it'd be impossible to track them all.

And finally, how do they fumble through what's a "sale" and what's a trade? If I trade my elvish sword of doomism +5 for some of your gold, is that taxable?

I think this is complete crap that's been put out there to get people riled up against the government.
 
A must read for "all gamers" except those that don't pay through the nose to semi-play a MMORPG, that is?
 
Nate_MachV said:
This thread should have been called a "MUST READ FOR MMOPRGERS" not for all gamers, I don't care about MMO games... doesn't affect me.

Misleading!
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Actually it is a must-read for everyone, because you could be in a position to sell a game account at a profit at some point in the future anyway. Take the guy who recently tried to EBAY his Xbox 360 account with 81,000 achievment points. Technically he should be taxed on that too even though it's not an MMORPG.

How games and accounts for games work could change a lot in the future, so it is entirely possible all games will be looked at as potential sources of income if something like this ever happens.
 
you know.. i like how some people come to this thread and divide it up into classes. Oh it's for MMORPG game that doesn't affect me. This sort of attitude never ceases to amaze me.

As long as they don't come after something you guyz do it's all good. They should probably lobby against FPS shooters.. THEY ARE SO VIOLENT!! Makem illegal or tax them so heavily no one will play them. Do the same for RTS because they're about wars and fighting oh my gosh..

This sort of crap affects everyone not just gamers. It's the fact the government is trying to regulate, tax and take complete control of peoples lives.. 1 law/bill at a time.

People blindy give up rights because something doesn't affect them so who cares. So when it comes to something they care about.. they get mad and expect others to care. It's an endless cycle of stupidity. Wake up people!
 
IndyJoe said:
^^^^ I don't believe that is true for the game Second Life.
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Yeah, in second life you can set up real business that exchange goods/services for cash. In the case of second life people exchange real services ( graphics/models usage rights) for in game cash. The kicker is that in-game cash can fluidly be exchanged for real money. There is an exchange rate. If you own a casino in Secondlife and convert your profits to cash, it sure sounds taxable to me.

As for taxing in WoW, that is rediculous..


Edit: I was curious so I poked around a little. 58 people are making more then 5000USD a month in SecondLife. Not a lot of people, but there are ~14000 profitable companies in SecondLife...
http://secondlife.reuters.com/stories/2006/12/05/surge-in-high-end-second-life-business-profits/
 
arentol said:
Actually it is a must-read for everyone, because you could be in a position to sell a game account at a profit at some point in the future anyway. Take the guy who recently tried to EBAY his Xbox 360 account with 81,000 achievment points. Technically he should be taxed on that too even though it's not an MMORPG.

How games and accounts for games work could change a lot in the future, so it is entirely possible all games will be looked at as potential sources of income if something like this ever happens.
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Exactly, tons of games have accounts, online persistence, and locked items/acheivements/whatever that fall into the exact same category. Some people can't see the forest for the trees...
 
Wally said:
A must read for "all gamers" except those that don't pay through the nose to semi-play a MMORPG, that is?
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Seriously, that 15 bucks a month for WoW is bankrupting me :rolleyes:
 
Hmmmm wait a second, so does that mean I can claim the weapons I purchased in CS and get some money back on my tax return?

One word for this... Retarded.

Also, if someone stole an item from you in a game like WoW or Diablo2 technically you could file that as theft because its yours and you own it and pay taxes on it.

SOMEONE STOLE MY CLOUDSONG!!!! AHHHHH!!!!
 
I don't see it ever working for a game like WoW. Like many have said, you don't "own" the in-game property. Now if the EULA was changed to state that you do own your in game items/money, then the government could tax you in theory.

There is a principal called "mark to market" that basically says if you are holding a piece of property that is traded regularly (which WoW money going on ebay is clearly regularly traded; a more common example would be stock), you are taxed on any gain you may get during that year, even if you don't sell or trade it. I am not sure how Second Life works with trading in game assets for real money, but it would seem that virtual property is definitely taxable if there is legal method for trading it for real money.

Anyway, if the EULA was changed in WoW and you did actually "own" the virtual property with a readily ascertainable value, then you could in theory be taxed even if you never sold it. I wouldn't lose sleep over this though. The IRS has bigger fish to fry.
 
The_Law said:
There is a principal called "mark to market" that basically says if you are holding a piece of property that is traded regularly (which WoW money going on ebay is clearly regularly traded; a more common example would be stock), you are taxed on any gain you may get during that year, even if you don't sell or trade it. I am not sure how Second Life works with trading in game assets for real money, but it would seem that virtual property is definitely taxable if there is legal method for trading it for real money.
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Huh...I'd think it would operate more like a 401k, where you are only taxed on the money when you go in and actually use it. How does it work then if they tax you year after year then after a while you decide to cash it all out? Would you only pay taxes on the amount gained since your last tax payout? Theoretically speaking, of course.

On the other hand, building up a large base then selling it off would be subject to capital gains as well, I'd think.
 
Spaceman_Spiff said:
You know, those wendy's commercials valuing everything in frosties and jr bacon cheeseburgers might just turn out to be brilliant social commentary.
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I'd suspect that Junior Frosties will eventually be worth more than the U.S. dollar. If the market crashes, you'd better believe I'm going to be loading up on these invaluable (and delectable) assets.
 
Spaceman_Spiff said:
Huh...I'd think it would operate more like a 401k, where you are only taxed on the money when you go in and actually use it. How does it work then if they tax you year after year then after a while you decide to cash it all out? Would you only pay taxes on the amount gained since your last tax payout? Theoretically speaking, of course.

On the other hand, building up a large base then selling it off would be subject to capital gains as well, I'd think.
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Yeah, a 401k gets special treatment because the government wants people to save money for retirement. Without going into too much detail, most property is only subject to taxes once the profit has been realized, which in most cases is when it is sold. The government wants to encourage people to save, so they make special rules for 401k accounts that allow you to defer tax until you cash out.

That isn't always the case with stock or other commodities (which in theory could be virtual money) that aren't a part of a special government exception. In the case of these types of properties, you can choose to use the "mark to market" accounting principle and be taxed on your gains every year (and conversely you can deduct your losses). But at the same time you are able to adjust your basis in the property. So if you buy some stock for $5, that is your basis. If it goes up to $6 in year 1, you are taxed on that $1 in gain, but your basis is accordingly adjusted to $6. So if you sell it in year 2 for $6, you pay no more taxes since you already paid for your gains in year 1. Okay, I just realized I got way more technical then I wanted. There are some big advantages to using this method, but it really varies on an individual basis.

This is all in theory of course when referring to virtual property. I don't see Congress even trying to pass a law like this.
 
The_Law said:
Actually it is a must-read for everyone, because you could be in a position to sell a game account at a profit at some point in the future anyway. Take the guy who recently tried to EBAY his Xbox 360 account with 81,000 achievment points. Technically he should be taxed on that too even though it's not an MMORPG.

How games and accounts for games work could change a lot in the future, so it is entirely possible all games will be looked at as potential sources of income if something like this ever happens.
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You have yet to explain how that would include me and or the hundreds of people I play with who don't have any reason to sell and account (let alone a solid account that actually would garner some sort of lucrative investing), and who would never consider doing anyways.

Exactly how would one benefit from me giving them my name in a game? My stats don't really come along with it - everyone would know it's not me. I don't collect super duper items and try to pimp them on ebay, hello I already have a real job and couldn't give a shit about selling items. Gaming is for fun, leave the money making to the CPL athletes.

I mean are people that stupid now that this is a real problem - it baffles me that people actually consider farming and selling items a job... get a life people!!. What do you think the internet is some free world? just because you can download free porn does not mean that it doesn't need some sort of control.
 
I can see a tax applying when you convert in game material to real money, since its really 'income'. But in game transactions cannot be taxed, as they have no real value. In all games so far, this is actually against the terms of service also.

If a virtual economy gains enough size and stability to the point that game currency can be considered effectively equivalent to a real currency, then perhaps there's a case to be made. However then the management of such an economy would have to be regulated, and the game company would then have to be responsible for health of such an economy. It simply won't work out. Tax the income from games, fine. But to say in game items have real value makes no sense. The value of things in games changes from day to day, and something of immense value one day can become worthless after the next patch. The in-game value of items and player wealth is determined wholly by arbitrary values set by the company.
 
Nate_MachV said:
You have yet to explain how that would include me and or the hundreds of people I play with who don't have any reason to sell and account (let alone a solid account that actually would garner some sort of lucrative investing), and who would never consider doing anyways.
*snip*
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Why does that quote say it's from me when it clearly isn't? That is odd.
 
Nate_MachV said:
You have yet to explain how that would include me and or the hundreds of people I play with who don't have any reason to sell and account (let alone a solid account that actually would garner some sort of lucrative investing), and who would never consider doing anyways.

Exactly how would one benefit from me giving them my name in a game? My stats don't really come along with it - everyone would know it's not me. I don't collect super duper items and try to pimp them on ebay, hello I already have a real job and couldn't give a shit about selling items. Gaming is for fun, leave the money making to the CPL athletes.

I mean are people that stupid now that this is a real problem - it baffles me that people actually consider farming and selling items a job... get a life people!!. What do you think the internet is some free world? just because you can download free porn does not mean that it doesn't need some sort of control.
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It's simple. There are two possible scenarios:

1.) They tax you when you sell an account or a collected item in a game for actual cash.

2.) They tax you whenever they determine that something you have done has INCREASED the value of your game beyond what you originally paid for it.

Under the current way games are handled Scenario 1 would have no impact on you, please ignore it. However, Scenario 2 would potentially impact you because it's based on the tax mans perceived value of your account, not on your actual cash return on the account. So if achievements are determined to have a cash value then you could potentialy be taxed on them.

In reality I doubt all this is likely to happen, but it is relevant because in the future we don't know how gaming accounts will work or how the IRS will view the value of games, game subscriptions, and game accounts. Better to at least be aware now in case it really does gets messed up later.
 
Wally said:
A must read for "all gamers" except those that don't pay through the nose to semi-play a MMORPG, that is?
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Bwahahahaha, that is a truly pathetic whine. Havent bought another game since I got wow, saves me at least 25 a month. Through the nose! Semi-play? What does that even mean? Means you didnt like it, and therefore must invent ways to shit on it.

This taxing thing, I dunno. Obviously the gov't is not in the habit of letting possibly taxable income slide through the cracks, (insert bad halliburton joke here) but this will be tough to enforce.
 
Ok so wouldn't it make sense that the US gov tax's transactions on exchange with US CURRENCY if we don't at any point use US Dollars then they shouldn't be able to tax us. now when u sell ur gold its a possibility you may have to pay sales tax but anything that is in the game is non-existent. the gov has nothing to do with it.
 
Hrrm, possible side effect?

I had to plunk down $xxxx on my new gaming rig, thats an expense now, right? :D
 
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