Tip.It Times Presents: Tax Collection ���¢�¢â�š�¬�¢â�¬�� A New RuneScape...

[pardon_m3]

I wish you had cited your sources (if the IRS was seriously considering this, it would probably make the news.)

 

 

 

 

 

 

 

That being said, I enjoyed reading your article. :)

[kdb148]

 

 

 

"Games" like poker are taxed too. Players who make money by playing poker have to declare this as income. The arguement that it is just a game and that it is a leisure activity is not that relevant.

 

 

 

 

 

 

 

Yes it is. The IRS isn't taxing the game of poker. It's taxing the income made off of that game. There is a big difference between the two. If you and I were to play poker without betting, the IRS wouldn't tax our game. It's the same thing with RS. If you go and "cash out" by selling items for real-world cash, then you have to pay taxes on that income. But if you simply make a trade of in-game resources, then there's nothing you've done that is taxable.

 

 

 

 

 

 

 

Ofcourse you are right that according to the ToS and the Rules of Conduct of most game companies, the theoretical trade of game money for real money is disallowed so it is already questionable if they can observe trade in real dollars there - but again this is quite related to the in-depth intellectual property right discussions that take place. On the other hand, the prohibition of trading certain products has never stopped people from putting a price on those products. The same is true for the value of in-game money, which can be observed easily on the various auction sites on the web.

 

 

 

 

 

 

 

The lack of a market value isn't really an issue. Clearly, it would be pretty simple to assign a real-world dollar value for just about everything. All you have to do is look at what RS coins sell for in cash, track the market values of in-game resources, and multiply the two. It wouldn't even take that long to at least ballpark the real-world value of the more widely traded resources in RS.

 

 

 

 

 

 

 

However, this is totally different for games as Second Life, Project Entropia, Everquest II and others, where it is completely legal and encouraged to buy and sell the in-game money. Some people in these games are already making a living (or even becomming a millionair) with these games. Others are buying virtual islands for $26,500 (and even earning back their initial investement within a year) or virtual space stations for even $100,000. The total trade value of Second Life seems to be ~$600,000 per day. With that in mind, it is not strange that the IRS is also considering taxing in-game transactions, at least in those 'games'.

 

 

 

 

 

 

 

It's not as strange, no, considering the actual dollar amounts involved. But in those games, it's much more analagous to investment income than it is to bartering. The leisure/professional services distinction I made is important here, because the point of bartering is that a person was able to get a service they themselves were incapable of doing themselves, like plumbing or dental work.

 

 

 

 

 

 

 

By paying with a service of their own, both people were able to receive what in many cases is a very expensive service, and since money never changed hands, both parties to the barter transaction received value for their service that wasn't being taxed. The difference with games like RS is that the things that each party receives in a trade isn't a unique service that they would have to otherwise pay real-world money in order to recieve.

 

 

 

 

 

 

 

For example, say I want an abyssal whip. I could probably go on the web somewhere and pay, say, $15 for one. Or I could save up 2 million coins and buy one. Or I could train my slayer to 85 and kill abyssal demons for one. However, if I want my house rewired, or my teeth cleaned, I can't do it myself (unless I happen to be an electrician or a very flexible dentist). I have to pay money for it, creating income for the person providing the service. The big difference between the two is that, in the game scenario, I can get that thing, the abyssal whip, without creating a taxable event for the person I buy it from, and I can even go and get one myself. In the real world, there is no way around creating a taxable event to pay for certain services. That's the big difference between in-game trades and real-life exchange of services.

[Duke_Freedom]

Yes it is. The IRS isn't taxing the game of poker. It's taxing the income made off of that game. There is a big difference between the two. If you and I were to play poker without betting, the IRS wouldn't tax our game.

 

 

 

 

 

 

 

However, you don't need to cash-out for it to be income. If our game of poker ends up with me winning $100 of you (thanks! :P), but I leave it on my 'virtual bankroll' at the poker site, it is still income. I don't need to cash-out for it to become income.

 

 

 

 

 

 

 

But if you simply make a trade of in-game resources, then there's nothing you've done that is taxable.

 

 

 

 

 

 

 

The argument remains that it is barter. The (theoretical) idea is that an in-game trade of, for example, 1000 steel bars for 600,000 coins, actually (in-directly) consists of selling the 600,000 coins for real dollars and then using those real dollars to buy the 1000 steel bars with. Assuming both gathered the steel bars / coins themself, both 'players' in the transaction have income.

 

 

 

 

 

 

 

There is a real world equilavent of this, which indeed is taxable. If I paint your house and you repair my computer as a return, this actually (in-directly) consists of me selling the service of painting your house and using the money earned from that to buy your service of repairing my computer. Again, both of us has income.

 

 

 

 

 

 

 

The lack of a market value isn't really an issue...

 

 

 

 

 

 

 

Indeed.

 

 

 

 

 

 

 

The difference with games like RS is that the things that each party receives in a trade isn't a unique service that they would have to otherwise pay real-world money in order to recieve.

 

 

 

 

 

 

 

I disagree with the need of it being a unique service in the first place, however, I could easily say that someone might sell the service of smithing someone's rune bars to full rune and claim that the person buying this service is unable to do this himself.

 

 

 

 

 

 

 

Or I could train my slayer to 85 and kill abyssal demons for one. However, if I want my house rewired, or my teeth cleaned, I can't do it myself (unless I happen to be an electrician or a very flexible dentist).

 

 

 

 

 

 

 

Using your "I could train my slayer to 85", I could also say that you "could" learn to be an electrician too. No it's not realistic that you will, but hey that wasn't required? It's not realistic to assume that everyone "could" train their slayer to 85 or their smithing to 99 either.

 

 

 

 

 

 

 

However, the Barter Tax makes no mention of vague terms like "unique services" and "impossibility to receive a certain service without creating a taxable event" and thus they are rather irrelevant in my opinion.

[Metzeten]

Its not really an issue, Runescape is based in cambridge, And I'm fairly sure that the rules are the least of the Inland Revenues concern, It has enough trouble dealing with benefits, benefit defraudment and tax returns, so much so it had to recruit Adam Heart Davis in for advertisments to encourage people to send them in!

 

 

 

 

 

 

 

Even a conservative british govenment from maybe heil Thatchers book of leadership wouldnt try to make the Inland revenue try and keep track of another 2 million returns on items that have no value and arent owned by anyone.

 

 

 

 

 

 

 

However I do find it highly amusing that anyone would even consider this for this kind of base, I mean, I expect that due to the total lack of enforcement ability for allot of the content of what taxing In game assets would include, especially one with such a single geared messed economy as runescape, would require massive effort on jagex to hire 24/7 database monitors and recording to track as a record then to get players to sign in to a tax return, for a game designed for a bit of fun 4 years ago!

 

 

 

 

 

 

 

It would be impossible to implement, impossible to enforce, impossible to track and impossible to persuade the public as feasable, the return wouldnt cover the losses.

 

 

 

 

 

 

 

In short, the IRS is full of people with less braincells than our characters left leg if they seriously think they could implement this.

 

 

 

And another thing; Other than the fact runescape is safe, the other MMORPG's wouldnt tolerate it, blizzard is too powerful to succumb to it, Sony is japanese as it is, so everquests small remaining elite players (of which I am one) wouldn't tollerate it and would either leave or bocott it. everquest 2 would also provide a similar responce, if not a little slower.

 

 

 

 

 

 

 

Of any rpg, there is no feasable way to get global cooperation to tax it. there are better things to spend the money on than such a ridiculos venture.

 

 

 

 

 

 

 

so, thats my view anyway. :-w

[I]

omg im not gona be able to play: monopoly, payday, or any of those other games with fake money!!!!

[Kama]

Its not really an issue, Runescape is based in cambridge, And I'm fairly sure that the rules are the least of the Inland Revenues concern, It has enough trouble dealing with benefits, benefit defraudment and tax returns, so much so it had to recruit Adam Heart Davis in for advertisments to encourage people to send them in!

 

 

 

 

 

 

 

Why do you feel the need to express the obvious? The UK`s tax office will start taxing online games about 3 and a half minutes after the IRS does anyway.

 

 

 

 

 

 

 

The rest of you seem to be missing the huge point that assets are taxable anywhere. If I dig a hole in the ground and find a diamond it is the same as getting a d leg drop from metal drags. Assets are just as taxable as cash.

 

 

 

 

 

 

 

Barter is also 100% taxable. You need to pay the associated taxes for the value of the trade.

 

 

 

 

 

 

 

The real world value of RS cash and assets is easily calculated from E**y and a host of other auction sites. The IRS, or any other tax authority for that matter, is not going to listen for 1 second that the value is anything less than the going rate that people are buying it for online.

 

 

 

 

 

 

 

The major point here is that a few people I know have a billion gold pieces. Now, translated to real life money that is about $10,000. If Duke could tell us how long it takes him to make a billion, we could actually think about making a living off playing RS.

 

 

 

 

 

 

 

It is completely financially feasable in China. The average monthly wage is less than $300 in Beijing. That is 30million gp, or about a mil a day. You can cut 3k yews a day and make a decent living. Soon the ability to support yourself off an online game will be much easier and will be come much more frequent.

[Kama]

omg im not gona be able to play: monopoly, payday, or any of those other games with fake money!!!!

 

 

 

 

 

 

 

What is difficult to understand here people! Monopoly money is worth nothing. It has no cash value. You can`t find a buyer for it no matter how hard you try.

 

 

 

 

 

 

 

RS gp on the other hand has many buyers in real life. That trading it is illegal is immaterial. Trading is going on, it is a fact. This establishes a very real exchange rate with pounds, dollars, yen, or any currency.

[binyc]

"Only two things in life are certain: death and taxes."

 

 

 

 

 

 

 

You forgot...

 

 

 

 

 

 

 

number 85 being open (Chad Johnson).

 

 

 

 

 

 

 

:D :D :D

[kdb148]

 

 

 

 

 

 

 

However, you don't need to cash-out for it to be income. If our game of poker ends up with me winning $100 of you (thanks! :P), but I leave it on my 'virtual bankroll' at the poker site, it is still income. I don't need to cash-out for it to become income.

 

 

 

 

 

 

 

Actually, you do, at least for it to be income in the sense that the IRS defines it. You would not be taxed until you cashed out. Just like you don't owe taxes on a capital gain until the asset is sold, even though it may gain value for several years before you actually sell it. Income cannot be taxed until it is "realized," a term of art which basically means that income can't be taxed until the tangible benefit of it is claimed by the person entitled to it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The argument remains that it is barter. The (theoretical) idea is that an in-game trade of, for example, 1000 steel bars for 600,000 coins, actually (in-directly) consists of selling the 600,000 coins for real dollars and then using those real dollars to buy the 1000 steel bars with. Assuming both gathered the steel bars / coins themself, both 'players' in the transaction have income.

 

 

 

 

 

 

 

No, they don't, and I already explained why that's not an appropriate comparison. The act of making or giving someone 1k steel bars does not automatically give rise to tangible, realized income like providing a professional service does. If coins were handled by RS in a manner that automatically credited/debited your bank accout with whatever amounts you traded, then I would agree with you. But the reason professional services were targeted by claiming bartered services as income is because providing professional services to someone outside your immediate family is a transaction for real life money. Always. Transactions in Runescape are not. That's where the analogy breaks down.

 

 

 

 

 

 

 

 

 

 

 

There is a real world equilavent of this, which indeed is taxable. If I paint your house and you repair my computer as a return, this actually (in-directly) consists of me selling the service of painting your house and using the money earned from that to buy your service of repairing my computer. Again, both of us has income.

 

 

 

 

 

 

 

But that's different than a Runescape trade as I stated above. You can break virtually any transaction between people in business, leisure, or any other relationship into these terms. I'm not arguing that this can be done, but that for tax puposes, the transactions in Runescape are not analogous to the real-life bartering situation.

 

 

 

 

 

 

 

However, the Barter Tax makes no mention of vague terms like "unique services" and "impossibility to receive a certain service without creating a taxable event" and thus they are rather irrelevant in my opinion.

 

 

 

 

 

 

 

It doesn't have to. Courts have interpreted bartering as creating income for both parties specifically because of the nature of the services provided, and the fact that they dodge income tax. It's a construct of the courts later codified to satisfy the IRS that people aren't dodging income taxes. That doesn't mean that it automatically extends to any transaction, real-world or otherwise, that can be broken down and expressed as a real-world cash transaction. Everything from your wife or mom cooking breakfast for you to your buddy giving you a ride to the store can be expressed as a purely dollars and cents transaction. That doesn't mean you've received income for it, or that it should be taxed. Bartering is simply a special case where it is.

[Darkginger]

I read about this some time back on the BBC News website (you see, it did make the news!). You can find the article here. Very interesting Tip.It Times, Editor. Thanks!

[Duke_Freedom]

Hm, reading a bit more about it, you're probably right on the poker example, although it depends on whether the money with the poker site is seen as a 'bank' account or not, but it is probably not seen as such (although that theoretically means that you could stash $1 million there without having to pay asset tax over it? a weird consequence I would say?).

 

 

 

 

 

 

 

Courts have interpreted bartering as creating income for both parties specifically because of the nature of the services provided, and the fact that they dodge income tax.

 

 

 

 

 

 

 

Such a freedom for interpretation is not a very good aspect of a law.

 

 

 

 

 

 

 

But let me ask you a question: what if a person bought a forum signature and paid 1 million gp for it? And what if that person then proceeded to buy someone else's service to design a website for him for the 1 million gp?

 

 

 

 

 

 

 

I'm fairly sure you'll agree that those transactions would be realized events and are taxable, as this is exactly what the barter tax is designed for.

 

 

 

 

 

 

 

Now exactly what is the difference between the person paying 1 million for your time to design a website or the person paying 1 million for your time to gather 1,000 steel bars? The HTML code and the forum signature are both just as virtual as the steel bars and the game money.

[Ginger_Warrior]

I have actually seen SecondLife on BBC Breakfast. It seemed as though everything in that game would be bought with real money, and not a currency that the game developers themselves came up with. Under that sense, it's easy to understand how that could be taxed, especially since you can sell assets for money (it's effectively tax-dodging when you think about it).

 

 

 

 

 

 

 

RuneScape is a completely different game. In RuneScape, it is actually an offense to use real money to aid your own development in the game, or to make further financial profit. The only money that matters in RuneScape is GP, and the glorius thing about this game is that it makes no difference if you're Bill Gates, or a street urchin; we all have the same opportunities in this game. Because of this, it would seem that as the Editor said, it's near impossible to regulate this, when the 'money' on RuneScape may as well be figments of our imaginations. And if taxation will be introduced into RuneScape, surely other economic laws must be introduced. For example, what happens to the guy with the Rune Pickaxe at Varrock Mines bullying the newbies out of iron (effectively a monopoly).

 

 

 

 

 

 

 

It appears that after reflecting on that, taxation in RuneScape and other economically-independant RPGs is a daft idea... especially if its going to the American Government. I for one am not paying a single penny to aid their occupations in Afghanistan and Iraq, which I believe as immoral anyway! If you're going to introduce Real Life into the internet, lots of problems (both economic and ethical) arise, only a few of which I have demonstrated here...

 

 

 

 

 

 

 

Here's an idea for them and Jagex to consider though... how about tracking the online RS Gold shops, which provide an unfair advantage and ruin the spirit of this game so much, and forcing them to pay their taxes :-k

[Duke_Freedom]

It appears that after reflecting on that, taxation in RuneScape and other economically-independant RPGs is a daft idea... especially if its going to the American Government.

 

 

 

 

 

 

 

Taxation is done in the country where you live. The US would not tax you, seeing as you are living in the UK. However if the IRS did this, it is ofcourse very likely that UK's taxcollectors would follow sooner or later.

 

 

 

 

 

 

 

which provide an unfair advantage and ruin the spirit of this game so much

 

 

 

 

 

 

 

The negative effect of RMT on the game is heavily overestimated by people. The word "unfair" is way overused in discussions about the morality of RMT'ing as well. There are tons of reasons why it is not "unfair".

[Kama]

Duke was far nicer on you than he should have been

RuneScape is a completely different game. In RuneScape, it is actually an offense to use real money to aid your own development in the game, or to make further financial profit. :-k

 

 

 

 

 

 

 

Your point being? The fact that there is a rule against it in RS has absolutely nothing to do with the fact that there is a very real market in RS gold in real life trading.

 

 

 

 

 

 

 

 

 

 

The only money that matters in RuneScape is GP, and the glorius thing about this game is that it makes no difference if you're Bill Gates, or a street urchin; we all have the same opportunities in this game. Because of this, it would seem that as the Editor said, it's near impossible to regulate this, when the 'money' on RuneScape may as well be figments of our imaginations.

 

 

 

:-k

 

 

 

 

 

 

 

Sooo untrue here. anyone who has no real life responsabilities is good to go. Bill gates on the other hand can hire 10 people to mine for him and do it with no problems. Hell if Duke had drop traded, he would still have billions in assets. Money buys just as many opportunities in real life as it does in this game.

 

 

 

 

 

 

 

 

 

 

And if taxation will be introduced into RuneScape, surely other economic laws must be introduced. For example, what happens to the guy with the Rune Pickaxe at Varrock Mines bullying the newbies out of iron (effectively a monopoly):-k

 

 

 

 

 

 

 

A dictionary might you help here. A monopoly is defined as the following:

 

 

 

 

 

 

 

In economics, a monopoly (from the Greek monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a kind of product or service. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.

 

 

 

 

 

 

 

Gathering resources has nothing at all to do with a monopoly. The only way that guy could hava a monopoly is to have all the iron(an impossibility), not beat out a guy to mine it.

 

 

 

 

 

 

 

I have It appears that after reflecting on that, taxation in RuneScape and other economically-independant RPGs is a daft idea... especially if its going to the American Government. I for one am not paying a single penny to aid their occupations in Afghanistan and Iraq, which I believe as immoral anyway!

 

 

 

 

 

 

 

This is purely and simply moronic. Sorry to others to flame this directly, but come on here. I think war is bad. I firmly believe it. But to eliminate terrorism, I am happy to support anything. The United Nations forces in the middle east are there to protect people like us. Protect Freedon.

 

 

 

 

 

 

 

Here's an idea for them and Jagex to consider though... how about tracking the online RS Gold shops, which provide an unfair advantage and ruin the spirit of this game so much, and forcing them to pay their taxes :-k

 

 

 

 

 

 

 

This is just a contradiction to your earlier arguments man. The fact that they are there means there is a market for them

[Ginger_Warrior]

OK... well firstly I would say I've checked your post history, and as far as I can see it all just seems to be flaming so don't bother apologising for something which you do deliberetely. Frankly I find it rude and insulting to my intelligence, which, ask anyone around me, is quite high. Indeed, in this entire topic, all you've done is quote others giving a counter-argument. You've sat on the fence incredibly well here. What's your view?

 

 

 

 

 

 

 

To your first counter-argument... the mere fact that Jagex has made this rule declares it as illegal. When we all join up to play RuneScape, we sign a contract (and I'm sure you'll agree; the exchange of money itself does count as a contract) stating that we agree to the rules and regulations placed by Jagex. Therefore, anyone that breaks this rule is commiting a crime in itself, if not in the US, but certainly in the UK, because in my eyes that would count as a breach of contract. It's a black market, and thus in my opinion, isn't a real market that can be translated into real life money or taxed. You may as well tax illegal activites such as prostitution and drug trafficing. Under that sense, yes, my last point was wrong, and I did contradict myself.

 

 

 

 

 

 

 

To your second argument. I don't really see what your argument is there. I think I can half-see what you're getting at (that Bill can just pay 10 people to do the work for him) but you were too vague. IF this is the case, then I would say I have no time for people like them. I support cooperation in the game, but I don't agree with using real life money to aid your own progress. As far as I'm concerned, they're cheats.

 

 

 

 

 

 

 

Your third misses my point entirly. Read the first sentence, and you'll see the monopoly thing was an example, not a point.

 

 

 

 

 

 

 

As for your fourth, I would say you're moronic. This is the way of the world, people don't agree with things (for example, the 2 million people that demonstrated against the war in Iraq in Hyde Park 2002 would also disagree with you). As far as I'm concerned, you can't eliminate terrorism, and especially not by spreading terror yourselves. That's retribution, not reform or vindication. Plus - I very much doubt that the war in Iraq OR Afghanistan was down to terrorism, but 9/11 (and I mean no disrespect by this at all) was a good reason to claim it was. If you wish to continue this, this isn't the medium to argue through. PM me and I'll gladly discuss this more.

 

 

 

 

 

 

 

As for your last, I've already said it's wrong. But you have to make a decision... is real life trading of GP a legal market that can be taxed, or a black market that can't, because it can't be against the rules of RuneScape, and still be taxed, as I highlighted in my first paragraph.

[warren211]

Woah woah hold on a sec... TAXING on an ONLINE GAME? Whats next, lawsuits for pking?

[warren211]

There's one major Issue I see in this... AGE LIARS. Some people, particularly those under age 13, lie about their age in order to play the game. A recent rule was put that you must be 13 or over to play, unless your parents send a written permission. Some people didn't want to do that, so they lied. YES, I KNOW there is a such thing as crime and punishment. but comon, TAXING for PIXILS?

 

 

 

 

 

 

 

Seriously, the IRS needs to get their nose out of places it doesnt belong. especially in games where kids are concerned. With the appropriate Christmas theme going along here, I'm saying the IRS is the nasty Grinch stealing christmas, the greedy ol' Scrooge...

[Angryburrito]

Anyone else find it scary that RuneScape's abbreviation of RS is found in IRS?

 

 

 

 

 

 

 

It's a conspiracy

 

 

 

 

 

 

 

>_>

 

 

 

 

 

 

 

<_<

[Guest]

I don't have too much time on my hands to read all the replies, so bare with me if some of this has already been said.

 

 

 

 

 

 

 

I'd like to point out that for starters, all U.S. citizens must pay taxes. Taxes are based on income, not age. If a one year old has been given enough stocks, bonds, and the works, they will earn an income that must be reported. The parents must sign off on the returns, but the child is the one paying the taxes.

 

 

 

 

 

 

 

I'd also like to point out that bank don't report your balance, just your interest (only $10 and above). They will only report cash deposits of $10,000 or more due to money laundering.

 

 

 

 

 

 

 

Taxes would be a high improbability due to the fact that Jagex is based in the U.K. If England decides to do this, then we will most certainly have to pay taxes. Rather than keep the rule stating that players own no legal right to the items, Jagex would probably have the players pay their own taxes instead of the company having to do so.

 

 

 

 

 

 

 

That's all I've got for now and would love to hear any replies, complaints, etc.

[Ginger_Warrior]

A bit of a stupid quesiton, but can they actually pass the bill onto us when, technically, they own everything, and we own nothing. It's taxing us for nothing isn't it?

[Guest]

A bit of a stupid quesiton, but can they actually pass the bill onto us when, technically, they own everything, and we own nothing. It's taxing us for nothing isn't it?

 

 

 

 

 

 

 

Well, in all technical sense, there is public and private property. We own private property, and public property would be owned by the city. That means that we technically do own things. Unless of course you're talking about something game related instead of reality. :lol: