dollar-sign-on-blue-background.jpgShould money you earn playing a game like WoW or Second Life be counted as taxable income? The US congress has been toying with this idea for a while, and if I’m any judge of governments, this will eventually come to pass.

Users of Second Life have the ability to legitimately exchange their in game currency for real cash, and many actually make a living solely through the online world. The situation with World of Warcraft is a little less clear cut, Blizzard frown on exchanging in game items and money for real cash, as the recent crack down on gold farming has shown. Other MMO publishers seem to take the same view as Blizzard, and for many games it is stipulated in the EULA that and virtual items or currency gained by a character in the game, remain the property of the publisher, so the player has no right to sell them outside the game. It would basically be like selling stolen goods.

This means that any attempt to tax the real income generated through the sale of virtual goods, in alot of cases, would involve the government legitimising theft. Its a tricky one. What’s even more worrying is the fact that the politicians may even seek to tax in-game transactions. From trading between players in an in-game market, to the loot that you collect when you kill a monster, every action that makes you money in the game will be a taxable event, even if you never exchange your gains into real world cash. The property angle comes in here as well, if virtual items and currency are considered to remain the property of the game’s publisher then no transaction has actually taken place, hell in most games even the character you play remains the property of the game makers.

It’s all quite baffling, with accountants on both sides looking for ways to either avoid any tax or things that can be reasonably taxed this looks like it might go on for a while. The inevitability of it is not in question, any chance that a government gets to make more money it takes after all. It’s not a matter of if, but when and how. The real question is are we going to start seeing official representatives of the IRS wandering around Azeroth looking for tax avoiders?

(From Slashdot and News.com.)

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