US revenue service wants to tax video game currencies

Nothing in life is certain other than death and taxes. As new industries mature and grow you can always be sure that governments around the world is going to try and tax them. The Internal Revenue Service in the USA wants to tax video game currencies in the future. It won’t need to be reported if the currency remains in-game, however.

Read: Competition: Google Home Mini Giveaway

The IRS have slightly backtracked somewhat after a provision on its website was spotted by avid gamers. Previously they were thinking about taxing every in-game currency transaction. On the archived version of the site, bitcoin, Ether, Roblox (likely referring to Robux from the game Roblox), and V-bucks are listed as specific examples of a “convertible virtual currency.”

It defined virtual currency as one that has an equivalent value to or acts as a substitute for fiat (read, real) currency. As of today, only bitcoin is listed as a virtual currency on the site. But that doesn’t mean you won’t pay any tax on in-game currency. If you ever want to move that money to the real world (it becomes “convertible”), it will be taxed. The IRS clarified in a statement:

“The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion. Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.”

With several games featuring an in-game economy, where real money can be made, any income from these will be taxed by most governments around the world in years to come. The likes of Second Life made it possible for people to make vast amounts of money through in-game activities, and later many made money selling levelled-up characters in World of Warcraft.