IRS Could Go After Gamers After New Rule Would Tax "Virtual Currencies,"?

I hope this isn't something that will happen, as it would be a very bad headache, but it might be. Have a look at the video, and comment guys. thx

https://www.youtube.com/watch?v=3jMPBzA7IFQ

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Nagash

the only thing that is certain in life is death and taxes

Wandering Mist

There has been an update to this story, and the IRS have clarified that you won't have to pay tax on non-convertible digital currencies.

“The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion,” the statement reads.

“Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.”

https://fortniteintel.com/do-you-have-to-pay-taxes-on-your-fortnite-v-bucks/29719/

Basically, any in-game currency that cannot be converted into real world money, and can only be spent on in-game items won't be taxed. I'm glad they have clarified this because if we started getting taxed on in-game currencies it would throw up some serious issues when it comes to game Terms of Use contracts. Most of these contracts specifically state that any in-game items or currencies assigned to a game account belong to the company, NOT the player. If we started getting taxed on in-game currencies then game companies would have to scrap that part of the statement, or pay the tax themselves.

granthor

I am glad they fixed that wording, cause I was getting worried with all the games I play.

Grimthar

Good. They should go further and tax the loot box sales 100%

Caeryl

doford wrote: »

Good. They should go further and tax the loot box sales 100%

1) No one is taxing game currencies that can’t be directly converted to purchasing power outside the game

2) Had the changes not been done in error, it would have been players, not companies paying that tax

Hartwell

So the IRS wants to tax the currency exchange on both ends? Sounds reasonable. First party businesses selling their currencies can already be taxed. There are third party businesses that run on selling digital assets. It's a little bit of a hairy thing for the IRS to get into, but it would be interesting to see if they tried. Makes me curious what would happen if gold sellers didn't report their earnings.

Wandering Mist

hartwell wrote: »

So the IRS wants to tax the currency exchange on both ends? Sounds reasonable. First party businesses selling their currencies can already be taxed. There are third party businesses that run on selling digital assets. It's a little bit of a hairy thing for the IRS to get into, but it would be interesting to see if they tried. Makes me curious what would happen if gold sellers didn't report their earnings.

I doubt it would change much for Gold Sellers or any other third party digital asset suppliers.

Caeryl

hartwell wrote: »

So the IRS wants to tax the currency exchange on both ends? Sounds reasonable. First party businesses selling their currencies can already be taxed. There are third party businesses that run on selling digital assets. It's a little bit of a hairy thing for the IRS to get into, but it would be interesting to see if they tried. Makes me curious what would happen if gold sellers didn't report their earnings.

The changes in question had no related to unendorsed goldselling. It’s entirely about convertible currencies such as what you see in EVE Online where you can turn ingame currency into real life buying power via official means.

Hartwell

Caeryl wrote: »

hartwell wrote: »

So the IRS wants to tax the currency exchange on both ends? Sounds reasonable. First party businesses selling their currencies can already be taxed. There are third party businesses that run on selling digital assets. It's a little bit of a hairy thing for the IRS to get into, but it would be interesting to see if they tried. Makes me curious what would happen if gold sellers didn't report their earnings.

The changes in question had no related to unendorsed goldselling. It’s entirely about convertible currencies such as what you see in EVE Online where you can turn ingame currency into real life buying power via official means.

I don't know about that. They mentioned Bitcoin, a decentralized currency. They don't seem too concerned if there is somebody endorsing the transactions. If money is trading hands, they want in on it.

Caeryl

hartwell wrote: »

Caeryl wrote: »

hartwell wrote: »

So the IRS wants to tax the currency exchange on both ends? Sounds reasonable. First party businesses selling their currencies can already be taxed. There are third party businesses that run on selling digital assets. It's a little bit of a hairy thing for the IRS to get into, but it would be interesting to see if they tried. Makes me curious what would happen if gold sellers didn't report their earnings.

The changes in question had no related to unendorsed goldselling. It’s entirely about convertible currencies such as what you see in EVE Online where you can turn ingame currency into real life buying power via official means.

I don't know about that. They mentioned Bitcoin, a decentralized currency. They don't seem to concerned if there is somebody endorsing the transactions. If money is trading hands, they want in on it.

Bitcoin is used for transactions of goods in multiple unrelated businesses. It’s a convertible currency.

Things like ingame gold which can buy ingame items only, is not convertible.

Edit: In the same way not every location will accept a check, but checks are still considered a form of currency and the income they bring is taxable. Bitcoins are not accepted everywhere, but they’re accepted widely enough that their earnings can be taxable.

Karthos

Technically any in game currency can be converted into actual money.

Selling gold, items and subscription tokens for real money has been around forever.

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