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The Virtual Whirl: Death and taxes
"Nothing is certain but death and taxes"; a rather sardonic and bleak proverb, quoted and paraphrased by a number of famous figures over the years. The earliest on record was Daniel Defoe, in The Political History of the Devil in 1726. Well, this week the death part doesn't concern us so much as the taxes. Many Americans have spent this month scrambling to get their taxes filed, and for many of the rest of us our own turn comes due in just a couple of months. With that in mind, I thought I'd talk about the taxation status of virtual assets.
IRS saves on recruitment costs with Second Life?
Well, we've had some strange news stories come across our desk, but this one certainly ranks up closer to the top of the list. Frank Stipe, the Virtual Worlds & Social Networking Project Manager for the IRS (yes, the Internal Revenue Service, the people you hate every April) has told CollegeRecruiter.com that the company saves millions of dollars by using Second Life as a recruitment opportunity.IRS Careers Island is not only a job-seeker's resource for more information about the IRS, it's also a race car track where you can drive cars and race your friends! No, we're honestly not joking. As to how the IRS saves money by running this job information/race track island, check out Stipe's full statement after the break!
GDC09: How to avoid new legal pitfalls in virtual world design and policy
At last week's Game Developers Conference 2009, we got the chance to sit in on Mark Methenitis' talk on How to avoid new legal pitfalls in virtual world design and policy. You may have noticed the sheer quantity of legal cases, rulings and issues surrounding virtual environments and MMOGs that have direct impacts on users and players lately. We found the talk to be an engaging and interesting one, which certainly went a long way towards clarifying some of the past, present and future problems and we've got a tasty summary of the highlights for you.
LGJ: Virtual Taxation
Each week Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games: It seems around this time every year, with W2s and 1099s filling mailboxes, that someone thinks it's a good idea to bring up the idea of taxing the virtual world. The irony really is that most of these discussions are far from complete and often only address one potential viewpoint that could be taken. The latest commentary comes from the Washington Post (via GamePolitics) with further follow up on New World Notes based on a recent publication by the IRS. Their basic contention is that the essential difference in the Terms of Service between the Second Life model and the more traditional MMO model (i.e. World of Warcraft, Ultima Online, Everquest) would mean different tax treatment. I don't think it's nearly so cut and dry.
IRS reports to Congress: Virtual worlds/MMOGs have always been taxable
Section 7803(c)(2)(B)(ii) of the Internal Revenue Code requires the National Taxpayer Advocate to submit a report to Congress each year and in it, among other things, to identify at least 20 of the most serious problems encountered by taxpayers and to make administrative and legislative recommendations to mitigate those problems. Thus, the statute requires that the report focus on problems and areas in need of improvement. Of the 20 "most serious problems encountered by taxpayers", number 13 is The IRS Should Proactively Address Emerging Issues Such as Those Arising From "Virtual Worlds". For the impatient, who just want the sound-bite, it boils down to the position that the existing US Tax Code already covers much of what takes place in virtual environments, with respect to assets, virtual currencies and transactions. Indeed most of the Code already deals with many things that are no less virtual and no more corporeal than are virtual environments. The only real issue the IRS seems to have with it is a lack of information on the part of the taxpayer about if, when and how to report and pay their taxes relating to virtual environment activities, and the lack of any uniform positional advice.
The DS Life: April 15
The DS Life is a weekly feature in which we scour the known world for narrative images of Nintendo's handheld and handheld gamers. If you have a photo and a story to match it with, send both to thedslife at dsfanboy dot com.For you jobless bums kids out there, April 15 is just another distant date, a day of little significance beyond Okami and Rondo of Swords' release. To us employed, dispirited grownups, however, it's a date that haunts the early months of every year, swaying and creeping towards us like an incoming swarm of Space Invaders. Sure, we've had since January to fill out our tax returns, but we're procrastinative people and we haven't even seen our W-2s in months. Oh man, just thinking about it is giving us stomach upsets ...
Why the IRS won't invade Azeroth
The Weekly Standard is the latest media publication to take up the flag on an interesting but so far theoretical subject: the idea of placing taxes on goods bought and sold in online universes, including our own World of Warcraft. Their latest issue has a look at the markets, both virtual and real, appearing around online games, and they claim the markets are "much bigger than you might expect."They quote both CNET and Wired on studies of the interaction between real and virtual dollars inside games like Project Entropia and Second Life, and come up with what seems like a pretty inflated figure to me: $880 million to $1 billion annually in the market for virtual goods. That, they say, is a big target for the IRS to go after. They end on a recent summit, at which an economist apparently claimed he was striving to determine "what is a taxable event in a virtual world."Interesting article, even though it does get a little bit too overspeculative at the end. For those of you who want it, my analysis is after the break. [ Thanks, Vince! ]
IRS to refund federal excise tax on long-distance calls
Getting the government to send you a $30 tax refund isn't quite as good as finding $30 that you didn't know you had in a pair of jeans, but we'll take it nonetheless. Yesterday, the IRS announced that it is refunding the "federal excise tax", or a tax collected on long-distance telephone calls made on landlines, VoIP lines, and cell phones for calls made from March 2003 until August 2006. Consumers can expect to claim a $30-$60 refund on their 2006 tax returns, and if as many people claim the refund as the IRS estimates, the American public will reap a total of $10 billion. Now that this is settled, that leaves one problem remaining: being that this tax was first put in place to fund the Spanish-American War (yeah, the one that ended over 100 years ago), which made us wonder -- what if we go to war with Spain again?[Via The Associated Press]
