28 March 2006

The IRS policing MMOs

This Wired article is quite scarry.
Especially this portion:

American gamers aren't likely to face dictatorial decrees to limit their play time, but within the next few years the courts will begin to examine how laws relating to taxes, copyright, and speech will apply in virtual worlds. In the near future, the IRS could require game developers to keep records of all the transactions that take place in virtual economies and tax players on their gains before any game currency is converted into dollars. "It's utterly implausible that it won't happen," says Dan Hunter, who has coauthored law review articles like "The Laws of the Virtual Worlds."

Personally I don't think it will happen, but then again, I wouldn't be too surprised.
If such a thing does happen, I have no plans to cooperate with the IRS. One option would be to make a company in Romania (or possibly some other country in Europe, after Romania enters the EU). This could be also a good idea in order to reduce the taxes, but I'll have to talk with a few accountants first.

Meanwhile, let's just hope that there will not be such laws, afeterall the very purpose of a MMO is so that you evade the real life. Imagine how much players would enjoy knowing that they have to give part of their gold to IRS. Especially the hard core Role Players :)
Imagine selling a sword to an NPC for a 10K gold, and getting a message like: "Your sword was sold for 10K gold coins, and 1K was witheld from you and transfered to the IRS" :D


Blogger Lost said...

I have to agree, I think that it's a stretch to force a developer to collect taxes on in game transactions. I think the main attention grabber/problem that has driven the feel/need for that action is games like Second Life where people have quit their 9 to 5 jobs and live solely off the income off the in game income and real money goes into the game for in game money.

Personally I feel that the IRS need to deal with the people who are using the game money to make real money. Do you force the lumber mill to collect the income tax because there is a minority of woodworkers who are selling their finished goods w/o claiming the income from it?

I can’t say that I’ve read over the EULA for EL, but I think that if you state clearly that game items aren’t to be sold & the policy is enforce that you can tell the IRS to go fly a kite. I do know that in EL you sell items to players, I still don’t see a problem as long as you are claiming that on your end.

28/3/06 20:03  
Blogger Radu said...

Yes, we are claiming our end, and that should be more than enough for IRS. We do not have any policy regarding selling items or characters for real money, except for the: "Do it at your own risk, and if you get scammed don't come to us".
Nevertheless, it is people's responsibility to claim their taxes for the money they might make from games, not the game developer's business.

28/3/06 21:23  
Blogger Donny said...

That is complete BS. How can you be forced to keep track of a virtual world like that? But to the IRS any money they can get their hands on seems fair to them. I can understand going after companies such as Blizzard with WoW that make huge ammounts of money but even then most companies try to keep players from spending real money to trade items in game, does that mean they will have to start watching eBay for such transactions as well?

"Imagine selling a sword to an NPC for a 10K gold, and getting a message like: "Your sword was sold for 10K gold coins, and 1K was witheld from you and transfered to the IRS" :D"
I would find that sort of message funny but at the same time be outraged by the IRS.

I think players would quit playing MMO's if they knew the IRS was going to get involved.

Anyhow on a lighter note good to see you on Blogger. I've had blogger for a while but just never really used it much other then when I was learning opengl but I have cleaned that up and plan on starting posts about my game and also learning some SDL like I had told you I was going to do before. I already have the documentation :). So I guess I have a reason to use blogger instead of gamedev...which sometimes got on my nerves, especially when people would remove ratings just because you said a certain IDE is too bloated and recommend someone to use something like Dev-C++ in a forum.

29/3/06 16:34  
Anonymous Anonymous said...

It looks like the tax only applies to selling virtual items for physical currency. Charging a virtual tax wouldn't make much sense (but hey, i've seen worse).


30/3/06 16:23  
Blogger Radu said...

Yes, but the IRS also charges taxes for barters, for example.
So it wouldn't really surprise me to start charging tax for the money you make in a MMO :)

30/3/06 17:34  
Blogger Kedan said...

I have to say that idea is stupid, they should focus there law's more on getting people that make money from a game to do there own tax's. Just like someone who is self employed would do. With game's like EL there is no way for the developers to know if someone has sold an item for real money or not, and making them have to program a way of knowing when people do is ridiculous to expect

31/3/06 04:43  
Blogger Carsten said...

Err, this article is in april's issue. This reads like an april fool's day joke to me :) Doesnt it to you?

Current law is entirely sufficient to tax income (in real money) from online games, there's no need to explore the virtual worlds' inner economies for this.

31/3/06 18:58  
Blogger Radu said...

When it comes to the IRS, nothig is too far fetched :)
Thik about it, thye even tax barter. That is, if you barter with someone, say, you offer them free hosting, and they offer you a fee virtual item, you should declare that virtual item to your income, at the fair market value.
This according to the current law.
The fact that no one declares their barters is another thing.

31/3/06 20:12  
Anonymous Anonymous said...

An early April Fool's joke, possibly...

11/4/06 22:41  

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