Monday, December 4, 2006
When the history of taxation of virtual assets is finally told, the blame will almost certainly fall on Julian Dibbell. He may have been joking when he wrote about trying to get the IRS interested in the tax status of his Ultima Online assets, but look who’s laughing now? The Joint Economic Committee of the U.S. Congress is examining the question, the Australian Tax Office thinks that these assets are taxable, and various people are asking, “Why shouldn’t we think of virtual assets in the way that we think about other financially-valuable assets?” This panel will venture into the uncharted terrain: the taxation of virtual assets, money-laundering using virtual worlds, and the myriad financial implications of virtual assets. There are no maps for these territories but this should not deter us.
Tax Profs on the panel were:
- Bryan Camp (Texas Tech)
- William LaPiana (New York Law School)
- Ann Thomas (New York Law School)
CNET News reports on the panel in IRS Taxation of Online Game Virtual Assets Inevitable, by Daniel Terdiman:
If you are a hard-core player of virtual worlds like World of Warcraft, Second Life, EverQuest or There, IRS form 1099 may someday soon take on a new meaning for you. That's because game publishers may well in the not too distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons or Second Life currency, even when those players don't convert the assets into cash....
"Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues," said Dan Miller, a senior economist with the Congress' Joint Economic Committee, who is also a fan of virtual worlds. "So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way."....
Prior TaxProf Blog coverage:
- JEC Warns IRS: Do Not Tax Virtual Economies (10/19/06)
- Bankman: On-Line Gamers Not Taxable Until They Sell Virtual Assets in the Real World (1/18/06)
- Can the IRS Tax Virtual Profits in On-Line Gaming? (1/10/06)
- Virtual Games, Real Taxes (6/1/05)
- Virtual Taxes: The Next Frontier in Virtual Property Rights in On-Line Gaming? (12/6/04)