RMT set to bring taxes to online gaming

[Venkman]

I can't see them being able to tax virtual goods without a whole bunch regulations on the handling of the goods by the companies, none of which exist on an industry-wide scale.

[CmdrSlack]

Generic "I BEG TO DIFFAR!" interjection!

Generic "LOL U PLAY UO" rejoinder!

[CmdrSlack]

I can't see them being able to tax virtual goods without a whole bunch regulations on the handling of the goods by the companies, none of which exist on an industry-wide scale.

Heh, they would if some new laws were made. Of course, I doubt that'll happen.

[Venkman]

Sorta chicken and egg though. One example:

Guvmint passes some law either at the local or national level, requiring some industry-wide common tracking and reporting system for companies that allow the sale of virtual goods, as the first step towards taxing what people can then report as legitimate income and expense. Think something like a lite version of Sarbanes-Oxley applied to MMORPGs.

The first thing most companies will wonder is how to get around it. Compliancy is a hidden unmeasurable expense at first, something to be very afraid of :)

But if you're based on microtransactions, you've probably already internalized enough of the checks and balances to both either people don't get overly screwed and leave, or that they well understand that nothing about the worth of their goods is certain, well understood enough to survive legal challenge.

[Johny Cee]

1. Government doesn't need to pass a law concerning RMT where you are paying real currency for virtual items....   This is already covered by existing income tax law. 

2. Sarbannes-Oxley (which is going to be repealed or gutted soon,  because it was a ridiculous overreaction) only applies to accounting and auditing of publicly traded companies,  not to tax regulation.

Accounting and auditing regulations are the province of the SEC,  which delegates the authority and power to the FASB and other Accounting industry organizations to promulcate regulation.

3. The real outstanding issue is non-currency transactions....  virtual item for virtual item,  where neither have an easily discernable real or cost value.  It is very unlikely that such transactions would EVER be income taxable,  just from problems of valuation.

4. A further issue is sales tax treatment....  How should currency RMTs be treated in regards to Sales/Use Tax.  That opens up a whole nother can of worms,  both because of traditional internet exemptions from sales tax collections as well as the administrative overhead of trying to correctly calculate sales tax on transactions taking place in every jurisdiction of the US.

As an example,  I've done a couple bid proposals for firms for Sales Tax preparation and the related accounting.  The one that sticks in my mind:  I turned in a proposal for a smallish ($2 - $5 million in revenue) business with sales in 42 states.  Quoted them $20,000 for one time research and setup costs,  and $6-8000 a quarter for sales tax preparation.  Responses to notices and tax issues to be billed at hourly rates averaging $120/hour.  The response can best be summed up as:  "are you fucking kidding?"  and we had worked substantial discounts into the proposal.

[Venkman]

I agree with you insofar as I cede to your much greater knowledge in this area :) However, just to clarify, I didn't mean SOX as applied to tax-law, just that something like a SOX would need to be in place in order to support the valuation, calculation, and collection of taxable revenue on both sides. In my opinion, of course and as usual.