Sign on Options
Theme:
To Dark

IRS taxation of game assets inevitable

  • By Daniel Terdiman, News.com
  • Posted Dec 4, 2006 11:39 am PT

Experts say it's just a matter of time until the feds get a slice of the real money being made in MMOGs.

From News.com

NEW YORK--If you are a hardcore player of virtual worlds like World of Warcraft, Second Life, or EverQuest II, IRS form 1099 may soon take on a new meaning for you.

That's because game publishers may well in the not-too-distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual-world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons, or Second Life currency, even when those players don't convert the assets into cash.

Most governments are only beginning to become aware of the substantial economic activity in online games, but the games' rapid growth and the substantial value of the many virtual assets changing hands in them is almost certain to bring them into the popular consciousness.

"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," said Dan Miller, a senior economist with the Congress' Joint Economic Committee, who is also a fan of virtual worlds. "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."

Miller's comments came during a Saturday panel called "Tax and Finance" at the State of Play/Terra Nova symposium, the fourth annual gathering at New York Law School of academics, lawyers, and other scholars to talk about the legal, social, and economic issues surrounding virtual worlds.

The panel was formed in the context of recent questions--first raised by author Julian Dibbel in his book Play Money and in an article he wrote earlier in Legal Affairs magazine--about whether the transfer of virtual assets, or players' acquisition of virtual loot by, for example, killing monsters, creates taxable events.

"If you haven't misspent hours battling an Arctic Ogre Lord near an Ice Dungeon or been equally profligate spending time reading the published works of the Internal Revenue Service," Dibbell's article began, "you probably haven't wondered whether the United States government will someday tax your virtual winnings from games played over the Internet. The real question is: Why hasn't it happened already?"

And while Miller's committee began examining these issues in October, his comments Saturday suggested there could be wider future congressional oversight and a revised IRS tax policy. That's in spite of the fact that Miller said his committee, and Congress in general, is not out to gouge virtual-world players.

"The Joint Economic Committee is not seeking to impose a new tax on virtual economies," Miller said. "We have a very clear record of supporting lower taxes in free market." Meanwhile, Miller's fellow panelists also weighed in Saturday on Dibbel's question, and came at it from several different perspectives.

First up was William LaPiana, a wills, trusts, and estates professor at New York Law School. He approached the question by examining whether estate taxes would accrue on the transfer to an heir of a sizable collection of valuable virtual assets.

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 when she dies.

More problematic, LaPiana said, would be laws that require estate administrators to take on responsibility for the proper transfer of assets to beneficiaries. Because most virtual assets are locked behind password-protected accounts, it would be incumbent on the administrator to try to figure out how to get access to those accounts.

"Whoever is going to run your estate...has an absolute obligation to collect all your property and make sure that it goes to the (proper) people," LaPiana said. "How do I make sure my trustee has access to this stuff after I die? These are all problems we're going to have to face."

Next up, Texas Tech University School of Law tax professor Bryan Camp addressed Dibbel's question with a warning. "Be careful what you ask for," Camp said, "because tax is always behind the corner. Tax is the shadow life [to many issues]."

Camp said that that section 61 of the US tax code, a 1913 provision, stated clearly that all income, "from whatever source derived," is taxable. Thus, the question of whether the transfer of virtual assets is taxable boils down to determining if there is a profit afterward.

As an example, he explained that if two people were to exchange copies of books, one of which is worth $30 and the other worth $24, the person ending up with the more expensive volume would have acquired $6 of taxable income.

Another example, he said, was Kyle MacDonald's much-publicized quest to trade up from a red paper clip to a house, which was ultimately successful.

"He has massive tax issues," said Camp of MacDonald. "He started with [the value of] a paper clip and ended up with [the value of] a house." MacDonald is Canadian, though, which puts him under Canadian tax law, which Camp did not address. His point is well taken, though: In determining tax liability--regardless of whether the IRS would likely try to collect--it is necessary to figure out how much profit has derived from a transaction.

However, Camp also said he is working on a legal journal article in which he will argue that at least some profits from transfers of virtual goods are not taxable.

For his part, Miller--who spoke last on the panel--said the Joint Economic Committee is expected to produce a report early next year that will address three goals.

First, he said, the report will address the areas, such as tax, cybercrime, and education, where virtual worlds connect with public policy and will therefore educate the committee's staff members about such issues. Next, the report will seek to identify future uses of virtual worlds, including those by commercial, nonprofit, and governmental bodies. And lastly, the report will specifically investigate the tax issues raised by virtual worlds. "We will look at factual technical questions," Miller said, "like what is a taxable event in a virtual world."

And that's where the answer to Dibbel's question is likely to come into clear focus, he suggested. "The key takeaway for the people" at State of Play, Miller said, "is that congressional and IRS interest in this issue is simply a matter of time."

392 Comments

  • kknostman

    Posted Jan 3, 2007 2:37 pm GMT

    Hmm, the day that you get taxed for "items not converted into real life cash" is the day MMO's flop. I don't think that statement is even close to realistic and shouldn't have even entered into the title of this article.

    Virtual items that are sold for real cash are an entirely different thing.

  • DarkSetz

    Posted Dec 31, 2006 9:13 pm GMT

    :: sighs ::

    I have no qualms with the notion of real life income made in a game like 'Second Life' being taxed as I don't see it as being any different than someone making money off of a hobby like wood-carving or sculpting. Technically, most any form of real income is going to be taxable. It doesn't matter if it's winnings from gambling, a paycheck from a job, or profits from eBay sales... it's income and should be reported appropriately to the government for tax purposes.

    However, the notion that "earnings" like experience points or loot in a game like 'World of Warcraft', 'Star Wars Galaxies', 'EverQuest', or 'Ultima Online' should be taxable is absurd. Completely absurd.

    That would be like taxing someone's "winnings" from a round of 'Monopoly'.

    People have compared (to some extent) owning "virtual property" to owning stock in a company. It's not all that bad of a comparison, but it's still comparing apples to oranges.

    Shares of stock represent something that is tangible (a portion of ownership in a company), exists in a known quantity, and are valued according to the real-world performance of said company.

    "Virtual property" is volatile in that its existence depends upon the software that interprets its data form and the hardware responsible for its storage. (What's the average life span of an MMOG these days...? 3-5 years?)

    It existing in a known quantity is almost entirely dependent upon the ability of the system (i.e. the software and hardware) and the company running it to prevent hacking and any form of cheating (e.g. item and/or currency duplication). (Beyond that, it becomes a software design and/or use consideration.)

    And the valuation of that "virtual property" is based upon something usually far from quantifiable: the demands of the player base. Just how much is a "Uber Sword of Mob Pwning" worth? How much is the 500 platinum coin made by the player that sold it in an in-game auction really worth? How do you figure that out? Is it REALLY worth anyone's time to figure that out?

    Is it really worth SPENDING TAX-PAYER DOLLARS to figure something like that out?

    I would have to say "NO".

    Now... if that player was able to cash-out that 500 platinum in in-game currency for 50 real world dollars? That would be a different matter.

    Regardless of any other consideration, let us not forget that we are mainly talking about the US Government here. A US Government that just saw the tax-happy Democrats win control of both parts of Congress to go along with the rest of its bloated bureaucracy. If there is a way to generate real tax revenue based upon some perceived value of something far less tangible than the air we breathe, then the US Government will find a way to do it.

  • dan_avalanche

    Posted Dec 31, 2006 3:59 pm GMT

    good tax people, maybe it'll discourage people from wasting their time in a mindless computer game and get them to go outside or get a real social life.

  • nikefreak

    Posted Dec 29, 2006 6:32 am GMT

    "Second Life does let you buy extra points with real money, but it does not provide a way to withdrawal those points in the form of hard cash later on. You literally sink your money into the game when you buy those Linden dollars - you cannot get them out again."

    While you have some good points, some are ultimately flawed. Take for example your point on SL... You state that you can put money in (Which is called Lindens after conversion) but that you cannot take them out. That is entirely false. My IRL friend takes out 40.00 US each week (approx, some more/less) actual cash, from the activities, camping, gaming, etc. that he does on SL. Yes, he is making an actual US 40.00 weekly from a virtual world. So SL is basically the same as a virtual currency. The rate changes just as the rate on the US dollar changes, and the currency is used for many things, the same as IRL. However, should the government tax such situations? I dont believe so. And if they do, they better hope they have a handle on how to do such things, as the article put it well, if they take taxes on assets in a virtual world/game, they would also have to provide for such deductions on the same platform, that the user had to spend to get such items, which would no doubtedly reduce the amount they are financially responsible for. However, with companies such as IBM, Circuit City, Dell, Hotels, Restaurants, etc. jumping onto the SL bandwagon, its only a matter of time before such assets and revenues become a governmental interest.

    EDIT - And to make it more clear, yes, SL provides both a way to BUY Lindens with US cash, and also to SELL Lindens FOR US cash. You do it the same way as when you buy, but when you sell, there is a small fee taken for selling it, and it is of course based on the current trading rate. So yes, SL provides (THEMSELVES, Not like other MMORPGs and games where you can sell such and such to others for cash, this is provided by the company who runs it, and is actual cashing in/out of the world).

  • _Sam_

    Posted Dec 16, 2006 3:14 pm GMT

    the government always wants to get a piece of the pie

  • JohnnySoftware

    Posted Dec 15, 2006 2:58 pm GMT

    Sure, there are economic principles in these games - but the games lack an economy of real assets.

    While this idea of taking these economies seriously probably does not hold much interest to the finance world, it could have some usefulness to educators.

    Business, programming, management, finance, political science, and economics educators might want to assign students projects to create a virtual IRS for MMORPG worlds as an exercise.

    It would force students to apply part of the skills and knowledge they had learned, and do it in the context of something bigger than a really simple program or research paper. Rather than be really narrowly focussed, it would force students to use knowledge/principles from other disciplines.

    In the real world, when they get jobs - that is exactly what they will have to do.

    It might also be used as the basis for getting students from different colleges at a university to work together on teams. Granted those with more able students on their teams would have a better go of it.

    But that is exactly the way things are most of the time in the real world. Just finding good teammates would be a useful exercise, as would striving to be a good teammate.

    At the end of the project, everyone would have a better idea of how the mechanisms of society work, and how they are connected by economics and finance.

    They would be better able to run businesses, operate in organizations, and write computer software if they knew things things from the get-go. So this could be a useful exercise.

    In the future, their might even be a use for such a program applied to real world things, as everything becomes more complicated.

  • JohnnySoftware

    Posted Dec 15, 2006 2:40 pm GMT

    It is a novel idea but it does not hold water.

    First of all, the legislative authorities are quoted in the article as saying they do not intend to tax game winnings.

    And lets face it, they are little more substantial than the points you score in bowling, a baseball game in an amatuer league, shooting a few hoops at the local school playground or park.

    Blizzard expressly forbids spending real money to buy virtual things from other players in their World of WarCraft MMORPG. They also do not collect fees for virtual stuff they give you.

    Their only fees are for the CDs with the game on it, the monthly flat rate subscription fee to access the game , and branded merchandise you want to buy from them like t-shirts.

    Besides, if they were going to tax the fact you gained a virtual 10 coppers and a sword, they would have to allow you to write off your virtual "expenses" when you bought your virtual armor and your virtual weapons that you used in order to win the battle that yielded the new virtual stuff.

    And of course, since the experience points, levels, metals, weapons, clothing, and treasure have no existence outside the game - they would have to collect the money in like assets: meaning, they would collect "coppers" or "silvers" from game players.

    That would just put them in the game. No one in the government or working in the US is interested in paying government employees to play a computer game and operate as a make-believe entity in it.

    There is only one thing to watch out for. While Blizzard has crafted their rules and software in such a way to preclude this, a less careful company might actually create an MMORPG that was little different than an online casino.

    After all, in a casino, you play against: other players, the casino employees, and machines. So, if an MMORPG designers/opreators allowed you to pump hard cash into the game to buy points, and withdrawal points converted into hard cash as well - then you would see an entirely different kind of situation.


    Second Life does let you buy extra points with real money, but it does not provide a way to withdrawal those points in the form of hard cash later on. You literally sink your money into the game when you buy those Linden dollars - you cannot get them out again.

    The Linden dollars being purchased with real money actually does make sense too, from an expense-of-providing the service too. There are costs associated with computer storage of the models, transmitting representations of the models to other users' computers including your own, and doing computations impacted by number and complexity of objects in the game.

    Trading/selling stuff in the game likewise carries similar things. Someone spends time creating a complex model or script so they can enjoy it is great.

    However, if they cannot get enough intrinsic pleasure out of this hobbiest pursuit, to justify a really complicated/difficult/tediious creation, swapping copies of it with other users for copies of things they created makes sense. After all, then they get several pretty little object or clothing models to admire and show off.

    It is still just a recreational hobby though.

    One would have to have hard cash going in and out of the game before there was anything resembling investment or employment income. I guess that is the one thing those who seek to create an MMORPG will want to avoid providing a mechanism for doing.

    So long as MMORPG makers follow that rule, I think the IRS is no more likely to tax their imaginary stuff than they are to tax the winnings they made in their sleep when they won the lottery in a dream.

    The premise of the pundit authors seems a really flawed when applied to the status quo. When applied to what some game companies might consider doing in the future, it does raise the issue of things for them to avoid.

    Game designers, architects, executives, accounts, and legal staff will probably keep one eye on these issues to make sure they don't dig a hole for themselves. Gamers too, I suppose, when they are looking at new games to subscribe to and play.

  • twocinc

    Posted Dec 9, 2006 7:29 am GMT

    It's an interesting question, however, it seems that the US government only taxes income when it is converted into currency. Take the straightforward example of capital gains on stock purchases. You can buy 100 shares of stock at $1/share. If the stock price rises to $100/share, then your wealth has increased by $9900, but you are not liable for capital gains tax on that increase until you sell the stock and convert it into currency.

    There does exist a market for virtual items - for instance you can pay someone to level up your character. However, the real worth of a virtual item is not determined by the virtual economy, but by the real economy. So, while I expect a government to tax income made by selling 'leveling up' services, there's no way that government will be able to justify taxing individual virtual transactions, unless there is real currency exchanged outside the virtual world.

    On the other hand, the fact that you can sell virtual property in the real world means that virtual property has real worth and therefore could technically be taxed under some property tax schema. I don't think this will happen for several reasons: 1) Property taxes in the US are levied by municipal governments on properties within their geographic boundaries. Determining the geographic location of virtual property would be extremely difficult. 2) An assessor is required to determine the worth of property before tax can be levied on it. I imagine that this would be quite difficult for virtual property due to the volatility of the worth of virtual items and the relative paucity of real-virtual transactions. 3) Auditing someone's virtual worth would probably require access to the intellectual property of the creator of the virtual world and/or internal company records protected by privacy records and net neutrality laws.

  • Zynn

    Posted Dec 9, 2006 12:15 am GMT

    This will never happen... People do not own any virtual gold, items, or properties in a game. Only the Intellectual Property copyright holder owns the property in accordance with their EULA. When we play a game and use the uber sword of orc slaying, we are only renting it. Our rent is being paid via software purchases and monthly subscription fees. When we log off or cancel our accounts, we do not get to keep the virtual items and hang them in our real livingrooms.

  • Inverni

    Posted Dec 8, 2006 4:13 pm GMT

    kekeke, all these guys that know so much about law are so great, mke and social came up with some great stuff. lol... taxable math... WAIT... dont taxes include a lot of math... would that mean that... TAXES ARE TAXABLE!!!!???

  • Genrihhh

    Posted Dec 8, 2006 4:08 pm GMT

    Hahah Taxes in virtual world???? Why goverment need money?? Are we going to war with someone else??? or open our borders??

  • mke112

    Posted Dec 8, 2006 3:22 pm GMT

    Well, if they could figure out how to tax our breathing, they will do it. They will try whatever they think they can get away with. These politicians live off of our money. When you see them in front of the cameras spouting whatever they spout, we must remind ourselves that the suits and bright red dresses they wear have been bought with our money, or with bribe money. The $500. haircuts and new hairstyles, the jewelry and expensive watches they wear, were paid for with our money, or with bribe money. The food they eat, the jets they fly in, the expensive homes they get to live in, all paid for with what they take from us. When their lips move, figure they are lying. I realize their are some that may be worth their salt, but unfortunately, most of them just lost the election because they were a bunch of cowards.

  • socialdisease

    Posted Dec 8, 2006 1:19 pm GMT

    I remember reading about other nations considering doing this, but they are communist. Under the Marxist philosophy all value is based upon the effort of those who produce. Therefore labor is the primary source of value. If you put effort into something no matter what it is it has value. Therefore your level sixty night elf has value because it took labor to produce. This has been the situation in China, at least with their legal system. However I’m not certain that the United States would openly embrace a communist concept for the simple benefit of increased (at least temporarily) revenue.
    U.S. current policy views virtual material as non existent. In order to tax something it must exist therefore the U.S. policy must be changed to recognize any and all non-existent materials. Since these objects are actually algorithms and number chains. It would be plausible to suggest that the government would tax numbers and equations. All math would henceforth be taxable.

  • peterson21128

    Posted Dec 8, 2006 1:15 pm GMT

    Thanks for that bit of news KSigMTSU I should have made it more clear about voting for the Conservative types not the Liberal whack job Republicans.

  • neo2161

    Posted Dec 8, 2006 12:21 pm GMT

    So if the IRS thinks all these in game items and gold are owned by us and tax us for it ,does that mean all the claims made by Blizzard and other MMO's about all the Items and gold are intellectual property and can not be sold for real money are all B.S. And does it also do away with the copyright laws . I guess what i am saying is how can you tax me on Items and gold i earn in a game if i would be breaking the law to sell them for real money in the first place !

  • choto8

    Posted Dec 8, 2006 11:19 am GMT

    f*cking lame

    god i hate the government. bunch of white collar crooks.

  • Blacklice

    Posted Dec 8, 2006 8:26 am GMT

    No Tax for me...IRS oh thats too bad. Canada Revenue has better things to do like hunt done people that aren't paying there taxes period.

  • rugripper40

    Posted Dec 7, 2006 7:23 pm GMT

    unreal...take the candy from the babies rmouths....lol...wars cost money,i guess ....kill the children and now take their money...what is this world coming too??? ....geez....cheers

    are they going to charge me for my hotels on my monoply board next.???...lol.....let the kiddies make money...minium wage is crap and has been that way for years and years...the minimum wage in my day was 2.01 an hour now its 5.00 an hour ...not much huh? and its been over 20 yrs....geez

  • DarthMcWord

    Posted Dec 7, 2006 1:48 pm GMT

    Wow. Our gov has to go this far to get money. I have a solution to the problems: pull out of Iraq and raise taxes to what the used to be BEFORE Bush.

  • nerd_rock_riot

    Posted Dec 7, 2006 10:34 am GMT

    I honestly think this is a joke.... hopefully lawmakers will see this too, but it would also have to be international law due to the world wide players.... wow... government is radiculous

  • Brian_WCU

    Posted Dec 6, 2006 10:26 pm GMT

    Nothing like taxes to kill the fun out of a game. IRS steps in, players will step out.

  • rwgober92

    Posted Dec 6, 2006 8:19 pm GMT

    %$#& the IRS and their %$#&in taxes....i cant stand them always trying to get into things to get a few extra bucks outa us consumers.....

  • rwgober92

    Posted Dec 6, 2006 8:19 pm GMT

    %$#& the IRS and their %$#&in taxes....i cant stand them always trying to get into things to get a few extra bucks outa us consumers.....

  • twardo101

    Posted Dec 6, 2006 7:17 pm GMT

    I dont think this will happen, the amount of money that would be lost by compaines like EA through the vast majority of people that just play a game for fun not buying a game like WOW because they will get taxed simply for getting a good axe or something would greatly decrease the size of the companies and their income - much of which translates into tax - and the tax on each game sold would also be lost.

    Along with that the idea of taxing a fictitious creations would pose far too many problems like how to value that asset - most transactions regarding items or land or whatever in GAMES - note the name used to describe these 'virtual worlds of assets' - are not done using real money for a start are they, and not only that but that would mean that the companies running the server for the games like WOW would effectively have the key to your money in virtual assets, meaning a crash in their system would cause mass problems. Also, any changes to the games would be much more complicated - people could take EA or Microsoft or whoever to court for a decrease in the value of their assets as a direct result of their updates to the games to alter the ballance of weapons etc etc.

    waaaaaaay too complicated and based on things that dont even exist, not gunna happen, if it does what next? taxing me on my arms or legs as an asset??

  • ProximaMinor

    Posted Dec 6, 2006 6:15 pm GMT

    This is dumb and frustrating on all levels.

  • KSigMTSU

    Posted Dec 6, 2006 5:13 pm GMT

    http://en.wikipedia.org/wiki/Dan_Miller_(U.S._politician)

    http://www.foxnews.com/story/0,2933,222402,00.html

    Go ahead, vote republican, geniuses. This guy and the head of this committee are all Republicans. Republicans are still in charge for about a month. Only time will tell if the Democrats take up any issues this outrageously ignorant.

  • Gruug

    Posted Dec 6, 2006 4:10 pm GMT

    I would not get excited about the issue UNLESS my local store starts excepts WoW gold when I buy groceries. In game gold/credits/money is not the same thing as "legal tender". Also, only the Congress of the U.S. has the ability to print real money. So, either this is not income since it is not real cash or all these game companies are guilty of counterfieting. Now, for those that sell the game gold for the real gold (real money) of people playing this games, I can see some sort of taxation. Of course, the person selling the in game gold will just pass his tax costs on to the game players. Is it just me or does this all sound a little silly that this is even being discussed. The government thinks that any transaction made between individuals should be taxed. Can't we get away from the "government owns you" and start going back to "you own the government"?

  • Gen-Gawl

    Posted Dec 6, 2006 2:19 pm GMT

    Does that mean the IRS would try to tax the gold I make or the weapon and armour I aquire in warcraft? I can see if I make a bussiness out of it where I trade virtual stuff for real money. Then it's just another form of income. But not otherwise.

  • BloodlessWolf

    Posted Dec 6, 2006 1:08 pm GMT

    Like everyone is saying, this isn't going to happen.

    But, the reason why the IRS is like this is because they are Insecure-Rim jawing-Sh*t faced co** masters

  • Draker696

    Posted Dec 6, 2006 12:09 pm GMT

    this cant be true...
    we pay the game , the monthly fee! and they want to tax assets in games....


    OMG

  • mydasx

    Posted Dec 6, 2006 9:56 am GMT

    Fear not my friends, this isn't going to happen. If it did, it would represent one of the greatest loop holes of all time. I'll automate a means to take digital losses every year which don't actually cost me money, this way, my tax burden is lowered. As a person who files 1099 every year, any losses i take, are tax deductible. Talk about sweet!

  • Terranah

    Posted Dec 6, 2006 8:06 am GMT

    Won't happen, because if the government admited virtual items had value they would be obligated to treat the loss or theft of virtual ingame items like weapons, armor, etc as real loss or theft and have to investigate. And since mmo's are national or world wide every time a theft happened it would involve the FBI.

    Also, every time an mmo nerfed a weapon, piece of armor, or adjusted a player's stats, value would change. And let's not forget the companies that sell ingame money. Basically they would be guilty of counterfeiting and go to prison as felons with all the murders and rapists.

    So, you can just see how ridiculous this sounds.

  • Gryphonsflight

    Posted Dec 6, 2006 5:50 am GMT

    This is complete bull. Our online worlds are our own, the government has no right to interfere in them because they see a money making opportunity. We pay for their upkeep and to play in 90% of them, most of us loose money we don't make it. So what if someone worked their backside off in a game world to get two million in digital land? Its not real land. If they do tax us as real items, thats not fair. If they count it as "real" they could not tax us without our own representation in congress, otherwise it is unfair we have no representation as gamers in our government for these areas.
    Our items are gotten by luck, skill, and the heart wrenches of most trades. I say if this happens we as gamers have to unite to end the stupidity of a non gamer government.

  • MasterAsh42

    Posted Dec 6, 2006 12:33 am GMT

    If all virtual assets are created in game and are acquired through the currency of the game and no transactions involving real-world monies come into play at all in the account (outside of software purchase and subscription fees), I feel a government has no right to tax a single thing.

  • peterson21128

    Posted Dec 5, 2006 11:52 pm GMT

    And this is why i vote republican.

  • Scorpion16

    Posted Dec 5, 2006 8:40 pm GMT

    And I thought that asinine regulation with videogame industry had reached it's height with the violent game bills.

    I guess there is always a way to lower the bar in IQ Limbo. How low can you go?

  • AuzSk8r

    Posted Dec 5, 2006 8:06 pm GMT

    dude, with all the money the government could make off this, everybody in North America could have free high speed internet AND everybody could be issued a just-good-enuff-to-play-your-MMO-laptop! and still make profit...


    (ok maybe i stretch it a bit)

  • Titanfan2083

    Posted Dec 5, 2006 6:28 pm GMT

    does this have an impact upon me or my tauren since we dont sell virtual stuff for real cash?

  • buffalobill

    Posted Dec 5, 2006 5:36 pm GMT

    Do I understand this? They are trying to TAX assets that do not really EXIST? For example, I kill a monster in Diablo 2 (I know, I'm old school as all get out) and he coughs up gold coins. I collect them, AND THAT'S TAXABLE INCOME?!?! That makes no sense. What makes more sense is that the government is finally starting to apply sales tax to online transactions, in that, if I collect a rare sword and Joe Schmoe wants it, I can sell it to him with real cash via paypal and now THAT income is taxed. That makes sense. Still depressing, but not so inane.

  • Jimbokundesu

    Posted Dec 5, 2006 5:25 pm GMT

    I wonder how FairTax would work with this....

  • SpiderFreak

    Posted Dec 5, 2006 5:16 pm GMT

    If they do this, though, it'll pretty much garuntee that they won't ban violent games, or at least violent MMOs.

    SF

  • nintendofreak_2

    Posted Dec 5, 2006 4:56 pm GMT

    So the government is now not only trying to shut down "violent" video games, but now make money off of them? They NEVER stop complaining about video games.

  • dn3datomiced

    Posted Dec 5, 2006 4:48 pm GMT

    They're not ADDING a tax...they've overlooked this source of income by underestimating the kind of revenue one could generate in a virtual economy like Second Life.

  • Supperdude9

    Posted Dec 5, 2006 4:39 pm GMT

    "This is what happens when Democrats get in power. They start slapping taxes all over everything."

    As opposed to Republicans slapping price tags on everything. Everybody has got to earn a buck, mind you.

  • geoff7234

    Posted Dec 5, 2006 4:22 pm GMT

    well, i guess it's suddenly a good thing there are clauses that make none of the virtual property we 'own' ours.

  • Jason____

    Posted Dec 5, 2006 4:12 pm GMT

    This is what happens when Democrats get in power. They start slapping taxes all over everything.

  • GTA_MAC

    Posted Dec 5, 2006 4:04 pm GMT

    "If you haven't misspent hours battling an Arctic Ogre Lord near an Ice Dungeon or been equally profligate spending time reading the published works of the Internal Revenue Service," Dibbell's article began, "you probably haven't wondered whether the United States government will someday tax your virtual winnings from games played over the Internet. The real question is: Why hasn't it happened already?"

    Hmmm when im putting together a puzzle, taking a crap, taking a bath, or dancing naked im not wondering wether the US government should be taxing me for it, hmmm why hasnt that happened already?

    With logic like this Ive gotten hope of becoming president of the universe with all my taxing ideas! I smell an Azeroth Tax Party.

  • icelandsamurai

    Posted Dec 5, 2006 4:01 pm GMT

    Somebody call the EFF!

  • Riverwolf007

    Posted Dec 5, 2006 4:01 pm GMT

    Whatever, this will actually benefit most of us because if they can force you to pay taxes on virtual property that means you can also claim a loss on virtual property and get tax breaks, I personally lose money like crazy buying games and if i can show an income loss that means i will get to write of my gaming expenses for the year. I wonder if the boneheads thought of that part.

  • GeneralK2

    Posted Dec 5, 2006 4:00 pm GMT

    with all the ways they come up with to tax you....
    what do they do with all this money?




    (private jet?)

Subscribe to GameSpot's YouTube Channel

Hot Stories

Newsmakers

Featured Stories

Submit News

Got tips? Send them in!

Related Game

World of Warcraft

World of Warcraft Boxshot
Follow:
  1. Not Following
    PC: Follow
  2. Not Following
    Macintosh: Follow
Add to List
  1. PC
  2. Macintosh

Follow for the latest news, videos, & tips from experts & insiders

GameSpot Fuse
    Platforms:

    Related Games

    Site Blogs