Instant leveling fromNCSoft?
By
Adeon Hawkwood,
Posted on: 2010-03-15 09:25 in CoH and CoV General Discussions
Quote:
Zing!|
Originally Posted by Janel
They Did this suggestion with AE by accident.
Look at what the outcome of it was? |
--NT
They all laughed at me when I said I wanted to be a comedian.
But I showed them, and nobody's laughing at me now!
If I became a red name, I would be all "and what would you mere mortals like to entertain me with today, mu hu ha ha ha!" ~Arcanaville
I'm gonna say no thanks. At the least, it's not a service I would ever use. Although I wouldn't mind being able to start my alts at level 14....
Quote:
I'm still not seeing your point. Obviously NC would have to pay tax on the revenue earned, the fact that inf is not actually currency with an actual monetary value simply reinforces that point. But there remains no sales tax, and since I'm not suggesting they create an "exchange" like LL runs, but rather a store where groups or individuals could register an account and sell inf through an in-game interface, no one but the inf sellers would need to worry about being taxed since they'd be the only ones making money.|
Originally Posted by Chase_Arcanum
Actually it IS true. It's your analysis that's wrong.
First, Linden Labs does get taxed on the revenue they realize- and that revenue includes its earnings from the sale of Linden Dollars. They're not taxed on the SALES TAX, just as many other "services" aren't taxed online. There are two areas to look at here. The first is point-of-monetary-transfer (where you exchange L$ for real $) Linden Labs DOES have to report their own L$ sales as revenue. Individuals that buy and sell L$ ALSO have to report this as income to the IRS. Most don't, but they should- and if audited, they could face tax evasion charges for not reporting that income if they exceeded the threshold amount (it's considered self-employment). ------------------------- Next: the "Virtual Exchange" (exchange L$ for L$, no real money exchanging hands): Where things get VERY wonky is when you run into the US Federal Tax's "Barter Laws." These were designed to address an emerging issue back in the 80's. Groups started printing catalogues of services they'd offer in exchange for 'points' that could be exchanged for other services. (X prepares Y's legal docs for 8 points each, then pays Z 8 points to do his accounting for him). In the mid-80's such exchanges had catalogs the size of phone books detailing services and goods available. Since no money exchanged hands, there was no "income" and therefore, the idea went, no INCOME TAX! So, the federal government changed the law. Now ANY exchanged service or good that has real monetary value (i.e. that other people would normally and legally pay for), should be reported and taxed as if that real monetary value exchanged hands-- regardless if there was any real money involved! (there's some latitude for "favors" like mowing your elderly neighbor's lawn for free, but really not too much). ------------------------- If you apply that to video games, the theory goes... it's practically all there. We exchange points (influence) for goods and services. If these goods and services were legitimately available for real money too, then the law's wording suggests that we'd ALL have to track and report all our non-money in-game transactions too. -------------------------- Do we do that? Hell no. The law would appear to COVER that as it was written, but most doubt that it'd ever be APPLIED that way. Instead, we treat online games more like we handle "Poker winnings." When you think of it, buyable influence or L$ is like giving cash for a poker chip. You might lose that chip before the night's out... or you might gain a hundred more... heck, you could gain a hundred more then lose it all before you're done. You're not assessed on every "transaction" when that chip (which has monetary value) exchanges hands. You're just taxed on your overall winnings. In L$ terms: we don't report taxes on anything we (the players) earn in L$ until we exchange it out for real $. Then we report it as earnings. The screwy part- all the laws governing reporting gambling revenue are so narrowly defined that they REALLY can't be applied to MMO's, but we tend to follow their prescribed behavior because they make more sense than the more broad -and more applicable- laws that govern barter networks that would bring online gaming to a grinding halt. |
If the barter laws were going to be a problem then everyone playing SL would be getting in trouble for not reporting their L$, which they're not. As you pointed out, they only really need to report what they take out of the exchange in actual cash. Though this is of course ignoring the fact that SL is an expense for the massive majority of players, and even content creators usually only make enough to slightly defray the cost of playing the game, so only a few players would really even need to report it as a source of income. The situation would be similar here: Only the few people using it as a business would need to worry about income tax, and honestly most of them don't live in the US, they live in places where making a few bucks a day is a livable wage.
Quote:
I wasn't really addressing whether or not this service would be a good or bad thing, but only whether it puts the game in a legal gray area unnecessarily.|
Originally Posted by Paladin_Musashi
....
If the barter laws were going to be a problem then everyone playing SL would be getting in trouble for not reporting their L$, which they're not. As you pointed out, they only really need to report what they take out of the exchange in actual cash. Though this is of course ignoring the fact that SL is an expense for the massive majority of players, and even content creators usually only make enough to slightly defray the cost of playing the game, so only a few players would really even need to report it as a source of income. The situation would be similar here: Only the few people using it as a business would need to worry about income tax, and honestly most of them don't live in the US, they live in places where making a few bucks a day is a livable wage. |
Well, it isn't that the SL people aren't getting into trouble, it's that the US Tax office hasn't taken notice yet. So far, the only analysis has been by first-tier tax assistants that responded on inquiry, and they suggested that barter laws would seem to apply to a Linden-style economy... but for an official ruling, you'd have to wait till the tax office take notice or petition requesting one. Petitioning costs $300.
Paying $300 to get a ruling that you owe more money seems a bit off.
Even if the IRS were to take notice, and even if they WANTED TO, it is likely that they wouldn't start an audit campaign on average users, anyway. Pursuing tax evaders can cost thousands to tens of thousands. Doing it to get a few hundred bucks back per audit isn't in the country's best interest.
This is one tax law that people break- similar to how (in many states) if you ordered from an out-of-state catalog and the mail-order company didn't collect sales tax, then you, the consumer, were expected to track, report, and pay the state what you owe. (The same applies for online sales in most states, BTW.) Practically nobody does it. Practically nobody enforces it... but it's something they COULD gig ya for if they ever had reason to scrutinize ya.
First, Linden Labs does get taxed on the revenue they realize- and that revenue includes its earnings from the sale of Linden Dollars. They're not taxed on the SALES TAX, just as many other "services" aren't taxed online.
There are two areas to look at here. The first is point-of-monetary-transfer (where you exchange L$ for real $)
Linden Labs DOES have to report their own L$ sales as revenue.
Individuals that buy and sell L$ ALSO have to report this as income to the IRS. Most don't, but they should- and if audited, they could face tax evasion charges for not reporting that income if they exceeded the threshold amount (it's considered self-employment).
-------------------------
Next: the "Virtual Exchange" (exchange L$ for L$, no real money exchanging hands):
Where things get VERY wonky is when you run into the US Federal Tax's "Barter Laws." These were designed to address an emerging issue back in the 80's. Groups started printing catalogues of services they'd offer in exchange for 'points' that could be exchanged for other services. (X prepares Y's legal docs for 8 points each, then pays Z 8 points to do his accounting for him). In the mid-80's such exchanges had catalogs the size of phone books detailing services and goods available. Since no money exchanged hands, there was no "income" and therefore, the idea went, no INCOME TAX!
So, the federal government changed the law. Now ANY exchanged service or good that has real monetary value (i.e. that other people would normally and legally pay for), should be reported and taxed as if that real monetary value exchanged hands-- regardless if there was any real money involved! (there's some latitude for "favors" like mowing your elderly neighbor's lawn for free, but really not too much).
-------------------------
If you apply that to video games, the theory goes... it's practically all there. We exchange points (influence) for goods and services. If these goods and services were legitimately available for real money too, then the law's wording suggests that we'd ALL have to track and report all our non-money in-game transactions too.
--------------------------
Do we do that? Hell no. The law would appear to COVER that as it was written, but most doubt that it'd ever be APPLIED that way.
Instead, we treat online games more like we handle "Poker winnings." When you think of it, buyable influence or L$ is like giving cash for a poker chip. You might lose that chip before the night's out... or you might gain a hundred more... heck, you could gain a hundred more then lose it all before you're done. You're not assessed on every "transaction" when that chip (which has monetary value) exchanges hands. You're just taxed on your overall winnings.
In L$ terms: we don't report taxes on anything we (the players) earn in L$ until we exchange it out for real $. Then we report it as earnings.
The screwy part- all the laws governing reporting gambling revenue are so narrowly defined that they REALLY can't be applied to MMO's, but we tend to follow their prescribed behavior because they make more sense than the more broad -and more applicable- laws that govern barter networks that would bring online gaming to a grinding halt.