Curse

Former Ruling · Dec 11, 2006, 09:57 PM // 21:57

Most of us wouldn't have to worry in the beginning since games like WoW and GW clearly state that the accounts and items gained therein are all property of the company running the servers. Since only transactions where property is exchanged between individuals are taxable, one can make the arguement that exchanges in games like GW do not constitute taxable events because the goods are not actually transfering ownership (since Anet owns both goods).

So really, like the article says, only transactions that can lead to real life currency being made are technically taxable, and there is no (legal) way to make real life money off of games like GW and the (legal) transactions we make therein.

They would have to target the illegal gold and items being sold on the internet for these games, like the article says (Everquest items on ebay, wow and gw money on ebay, etc) and that would mean taxing your ingame gold on suspection that you *could* sell it on the internet.

The sad part this that could actually hold up in court. User Agreements (the only thing telling us this transaction for rea llife currency is illegal) are NOT legally binding contracts under US Law. If they have any standing at all legally is decided on a case by case basis (and they have been struck down as not binding in many cases).

My point being is if the Supreme Court makes a final YA or NA on EULA's being binding or not, and they say no...That opens up alot of doors...Because that whole "cant sell the stuff on ebay" could be thrown out the window potentially - making gold selling a legally taxable transaction.

*Darcy* · Dec 12, 2006, 12:54 AM // 00:54

1. The IRS is only interested in taxable income. They would be going after the E-bay sellers who are not reporting their income correctly. They don't care if a transaction is legal or not, as long as you report the income and pay your tax on it.

2. The sell in-game would be state sales tax for each transaction whether with a player or an NPC. As ANet has a physical presence in Washington state, that would be the state pushing for the sales tax revenue. They would claim that if it can be sold outside the game then it has a real world monetary value and therefore the transactions are taxable.

3. ANet/NCSoft are already preparing by enforcing the EULA. They punish violators with temp and perm bans that show that the player does not own what he has when the company can take it away at any time. They are spending a good bit of money in tracking down EULA violators who are selling gold, accounts and items through Ebay and other means in the real world. This will give them a basis for fighting any attempts at brushing the EULA aside.

Most EULAs are not enforced by the software companies and that's why they are a shaky defense. As with Copyrights, a company must be able to prove that they put effort into forcing compliance.

Microsoft did not enforce their EULA from day one. They didn't care if you were using illegal copies as long as you were using Microsoft products and expanding their potential customer base. This year they decided to start forcing compliance, by denying you updates if your OS was illegal. All you had to do to make that sign go away was to purchase a legal OS at the going rate. They couldn't prosecute because there was no proof of enforcement.

Forjo · Jan 08, 2007, 09:53 PM // 21:53

Imagine -- you decide to hand down your Guild Wars account to your kid. You've played for years and have amassed a substantial collection of rare skinned weapons, stacks of ectos, and prestige armor for multiple characters. Finally, you're ready to move on to other things.

Then you find out that certain individuals and government entities have assessed a real-world value to your account, and want their share. Could you really be asked to pay taxes on your account? With companies and individuals making real world money for in-game items and currency, it's easy to see how the answer to this question could be "yes".

This is definitely a cause for concern. Please read the article and weigh in. I guess I wouldn't have a problem with this if we paid using in-game currency, but the idea that our accounts could be taxed based on the value of the items that we collect?

Scary.

http://news.com.com/IRS+taxation+of+online+game+virtual+assets+inevita ble/2100-1043_3-6140298.html

lightblade · Jan 08, 2007, 10:07 PM // 22:07

GW works slightly different from other online games. Games like WoW where you pay monthly subscribetion fee is like you're "renting" the game from the company to play it. Therefore it's not your personal property and you don't need to pay tax for it.

As for GW, one account is one single property belongs to you alone. Even if you have to pay tax for it, it's going to be something like "all or nothing".

scrinner · Jan 08, 2007, 10:16 PM // 22:16

when you buy guildwars, you dont buy the game, but access to anet servers not the actual game. Mind you, you can download the game off their website.

the_jos · Jan 08, 2007, 10:20 PM // 22:20

One day we will be paying taxes for the sunrise and the air we breath...
That is, when some "senior economist with the Congress' Joint Economic Committee" has had another bad night.

I see the issue with games like Second Life, where ingame currency has real world value.
That could be solved with ingame property taxes and real world income taxes.
But for games like GW and WoW, i'd say put taxes on all E-bay transactions.
E-baying GW is prohibited, but if the government wants it's share, they should collect taxes at the real-life money streams, not the virtual ones.

I also wonder how the US government is going to collect taxes here in Europe.
Or, even 'worse', in China.
Game companies can move to other coutries to prevent taxing.
And this will cost the government (more unemployed people, no more taxes on the revenue of the company).
China and to lesser extend India provide a large consumer and employee base, so no need to stay in the 'First World'.

Mercury Angel · Jan 08, 2007, 10:28 PM // 22:28

http://www.guildwarsguru.com/forum/s...php?t=10086644
http://www.guildwarsguru.com/forum/s...php?t=10061764

A few prior threads on the matter.

Swinging Fists · Jan 08, 2007, 10:41 PM // 22:41

I was going to comment in more detail about who actually owns the game, but scrinner already covered it. Everything in the world of Guild Wars belongs exclusively to ANet. So, this alone eliminates the possibility of any successful IRS imposition of a tax on any in-game wealth.

the_jos: EBay transactions are already taxable and enforced. It is taxed because an EBay seller has made a real world profit of whatever the proceeds of the sale were. This article (and previous articles discussed in previous threads) is about taxation of ingame wealth.

The basis for this, as explained in one of the previous articles, was that Second Life game where there was an in-game mechanic for exchanging in-game gold for real life money. This brought about the idea that the virtual wealth in this environment represented real world wealth because it was convertible into cash.

Malice Black · Jan 08, 2007, 10:54 PM // 22:54

Read the post regarding this subject it the links posted.

FoxBat · Jan 08, 2007, 11:58 PM // 23:58

Every single MMO company (in fact, every single software company) from Blizzard to Sony to Anet *wants* you to believe that they own all your characters and items, that you are merely renting the privledge to use them, whether that's a monthly or one-time fee.

However, the government can likely figure out a way to tell them they are dead wrong if they want to. EULAs that everyone treats like gospel are still somewhat shaky when challenged in court. The mere fact that ebay and professional farmers exist is enough to argue that players do have some ownership over their items, and it's even worse for those "free" MMOs that have you micropay for phat lewt, or company-provided services like Sony Waystation. Even MTG Online tries to say that you don't own the virtual cards you buy booster by booster and quite openly and legitimately sell to other players for cash.

Malice Black · Jan 09, 2007, 12:42 AM // 00:42

What is it with Guru users and conspiracy theory's?

Divinitys Creature · Jan 09, 2007, 03:31 AM // 03:31

Can I pay my real world taxes with plat? That would own.

Cebe · Jan 09, 2007, 12:30 PM // 12:30

In the UK, as far as I am aware, If you were to GIVE your GW account to your child, even if the Government assessed it and it held great value providing you live for 7 years you don't pay tax on it. It was the same with my Grandparents...they put money away for me and my brother a long time ago...they never paid tax on it and providing they lived for 7 years (which they have) then no inheritance tax will be paid either.

Besides...Nothing can happen since as Divinity's Creature says...if governments want to tax in-game money they should receive in-game money...people will then start demanding to pay taxes in the form of platinum

What is the government going to do then? Buy ectos? For what? That's not going to help underprivaleged youngsters in deprived areas or pay hospital staff...

Where will taxing people end then? Will they write to Santa Claus in Lapland demanding Customs and Excise tax on all the toys he's brought in "illegally" on his sleigh? People seem to be forgetting...you DID pay tax on the game (least we do here) in the form of V.A.T...that's as much as they're ever gonna get

Divinitys Creature · Jan 11, 2007, 07:37 PM // 19:37

Some people also sell lap dances in-game LMAO. I'd love going over to the taxman and going afk while my ele does a /dance for a couple of hundred hours.

Pluth · Jan 26, 2007, 06:34 PM // 18:34

I came across this article that I believe is absolutely absurd. This really only applies to U.S. citizens though.

HTML Code:

http://money.howstuffworks.com/virtual-tax.htm

In theory it makes sense, but it would cripple MMOG's and I don't get how they could track how much in game money you have made due to privacy issues.

Please put this in the right area if it doesn't belong here.

Yichi · Jan 26, 2007, 06:49 PM // 18:49

it would only cripple mmorpg's if youre buying online gold. other than that, they would be fine.

mike1480 · Jan 26, 2007, 06:50 PM // 18:50

Heh that's makes me chuckle.

Unfortunetly, exchanging real-world value for in-game value is against most MMORPG user agreements because this type of thing could happen.

But because no one officially owns the game except the maker, like for instance, Anet, people are exchanging their real-world value for nothing. And according to the IRS, giving away your money because you're stupid isnt really taxable (in fact, if its to charity, it's tax deductible).

Now since most of you are too young to care, I'll shut up now.

Blame the Monks · Jan 26, 2007, 08:53 PM // 20:53

For most people, I doubt will be an issue.

Section 183(a)-(d) of the US Internal Revenue Code provides that losses incurred in carrying on personal hobbies are not tax deductible. It would seem to follow (to me) that if losses from personal hobbies are not tax deductible, then gains from personal hobbies are not subject to taxation.

So what is a "hobby?" According to the Code, $ 183 applies to activities "not engaged in for profit." IRS Reg. $1.183-2(b) provides a list of 9 factors to determine if an activity is one that is normally engaged in for profit:

1. The manner in which the taxpayer carries on the activity.
2. The expertise of the taxpayer or his advisors.
3. The time and effort expended by the taxpayer in carrying on the activity.
4. The expectation that the asset used in the activity may appreciate in value.
5. The success of the taxpayer in carrying on other similar or dissimilar activities.
6. The taxpayer's history of income or losses with respect to the activity.
7. The amount of occasional profits, if any.
8. The financial status of the taxpayer.
9. The elements of personal pleasure or recreation involved in the activity.

So take a quick look at these factors: I would not consider gaming to be a businesslike activity for most of us (#1), most of us can hardly be considered professional gamers (#2), few of us expect the assets used to generate online capital -- ie, our computers are worth less not more (#4), few of us are successful in making money in many games (#5), few of us have a substantial history of large profits in online gaming (#6, 7), and most of us derive a lot of personal fun in gaming (#9). Although most of us spend a crapload of time gaming (#3) and #8 is a wash, these factors pretty clearly show gaming is not an activity most of us do for profit, and thus our assets will not be subject to taxation. People who play professionally in many tournaments or those who ebay mass quantities of gold as a business, on the other hand, probably should be taxed.

And finally, as mentioned before game companies still claim to own in game items. One of two things can happen as a result of this. If the IRS deems the gaming company actually still owns the property, the gaming company would get swamped with a massive tax liability for all of our items. This would drastically change the financial prospect of gaming companies. On the other hand, if the IRS decides the items belong to you, not the game companies, game companies will be subject to lawsuits for compensation if they destroy your property by deleting your accounts or items.

Interesting little wrinkle, eh?