[Olorin]

I hope that they don't go too far here. Taxing people who sell their virtual items/currency for real money on eBay is fine. Taxing players because they made 500K in gold by camping the ogre spawn last month gets more scary.

For all those players who never connect their virtual "assets" with the real world, would it be fair to tax them real money? And what happens when a MMORPG ends its run? Do all the players get to claim massive losses due to all their gold/items/houses disappearing? Can they sue the game company because their assets (that they were taxed for acquiring) were taken away? If a game is losing popularity, and the values of its stuff is declining on eBay, is that a tax deductable loss in assets?

What I hope to see in terms of the IRS and virtual worlds, is for the IRS to only get involved when the virtual world interfaces with the real one. If someone gives me a castle in UO for free, I shouldn't have to pay taxes on it. But if I go and sell said Castle on ebay for $50, then I should have to pay taxes on the $50 I just earned. Perhaps you should even be able to deduct your subscription costs from your profits before being taxed.

I also don't know how this meshes with the claims by all the game companies that players do not own any of the virtual items in the game. If a player can't demand compensation for their castle if the shard gets shut down, should they have had to pay the IRS when they got the castle?

Another question...does the IRS have jurisdiction in Brittania or Azeroth? If it depends on the physical location of the servers, what happens if Blizzard relocates it's game servers to another country?

I think the best way to handle MMORPG economies is to treat them as completely virtual, with items having no intrinsic value to the player (after all, they are technically all property of the game company), until such time as the player converts the virtual items into real assets (either money or items). If the IRS goes into the virtual worlds and assigns values to items within it, and then taxes the players on the increase in their assets, then they open up the game companies to all kinds of liability. If the IRS says that my items have real life value, does someone stealing them constitute a crime?

Sorry for the long post, but I think this issue can get very complicated, and I hope that they are very careful with it.

edit: If the IRS does decide to tax me when I make 1M gold in profit from my vendors, can I pay them in gold?

[ 12-04-2006, 04:57 PM: Message edited by: Olorin ]