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The IRS Wants Your Rupees And Zennies

GreedIn today's installment of "the more things change, the more they stay the same" comes word that in the future the government may decide to start taxing non-existent assets that are capable of being converted into real money.  MMO games that allow players to buy game currency with real money are the issue here, as the current tax law doesn't apply to money that isn't real money and assets that aren't real assets.  If I earn one million gold in World of Warcraft, for example, I could turn around and sell that fake money for, say, $100,000 in real money (assuming an exchange rate of $50 for every 500 pieces of gold). 

While that is technically income, you can bet that most players don't mention such business transactions to the IRS.  Granted an exchange that large might send up some red flags at the bank, but keeping one's transactions small could keep things under the table.  The point is, if players earn money by selling fake money and fake items, the government doesn't tax that income.  By formalizing the laws behind the sale of in-game assets, the IRS could start taxing those assets.  It's a slippery slope and one that would impact the entire nature of MMO games that have large economies.

Personally, I think taxing these assets is a bad idea under most circumstances.  I'm thinking of the casual player here, the people who aren't making a business out of playing World of Warcraft and Second Life and are just having fun and making a little extra money on side. However, as technology changes the way people make a living, I can see where adjustments have to be made.  Just as people today have careers as professional Internet auction traders, in the future people could very well make a comfortable living trading in gold, rupees, or zennies.  In fact, some people are already doing so by running gold farms, although that's happening mainly in Asia at the moment. 

Massive amounts of income should be taxed fairly just as the rest of us are taxed on our significant sources of income.  The government shouldn't worry about if I earn $30 selling fake items, but they should if I earn $30,000.  It will be some time before any of this comes to pass, as the government employees behind these policies don't quite understand what it all means.  However, as younger employees familiar with these ideas are promoted and rise to power, that could change.

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