Tax/Legal Ramifications with RMAH?

[Nocuous]

From a business/legal perspective I think whoever pulled the trigger on the RMAH idea should be fired. Even though players sign a TOS agreement, I think Blizzard has opened itself up a slew of issues that a TOS cannot address or provide adequate protection for. Just because you list something in your TOS and players agree to it, doesn't mean that the IRS/Government is going to play along with it and absolve you of all wrong doing.

I am accountant and in my job I have to be extremely careful at how we handle certain issues related to payments to individuals and corresponding tax implications. Most accountants, or people that have had tax issues involving the IRS, know that the IRS is not an entity you want to mess with. They can indescriminately clean out your bank accounts, seize assets, garnish wages, etc., etc., etc. IRS = GOD on earth. If someone makes $600 or more a year through Blizzard, Blizzard must report this to the IRS and to the individual (Form 1099). If paypal is doing this on that for Blizzard, the 15% makes sense. What about the Battlenet side? The IRS does not allow you to pass on your responsibilities of reporting to the individual.

I also think they have opened themselves up to lawsuits/investigations resulting from "patching" the game. If they nerf/buff stats, doesn't this affect the prices/value for gear on the RMAH? I can't help but feel they have built a way into D3 for the developers to fleece down the players. What if a developer is able to "make" gear with any stats they want and then sell it for huge profits on the AH? What if employees knows about game changes prior to the public knowing? Isn't it essentially equal to "insider trading" if an employee dumps gear with impending nerfed stats on the RMAH at inflated prices or buys gear with implending buffed stats at discounts prior to the changes being announced to the public? How is Blizzard going to monitor any of this?

Blizzard needs to quit trying to be something they are not and should get back to what they used to be good at...making games.

[Deleted]

There are lots of people who don't declare their earnings from online businesses, ebay, etc.

I also think they have opened themselves up to lawsuits/investigations resulting from "patching" the game. If they nerf/buff stats, doesn't this affect the prices/value for gear on the RMAH? I can't help but feel they have built a way into D3 for the developers to fleece down the players. What if a developer is able to "make" gear with any stats they want and then sell it for huge profits on the AH? What if employees knows about game changes prior to the public knowing? Isn't it essentially equal to "insider trading" if an employee dumps gear with impending nerfed stats on the RMAH at inflated prices or buys gear with implending buffed stats at discounts prior to the changes being announced to the public? How is Blizzard going to monitor any of this?

Blizzard needs to quit trying to be something they are not and should get back to what they used to be good at...making games.

This is most definitely what the "developers" had in mind when designing the RMAH. Either they took the cut from item sales or 100 dodgy websites will do it for them. Perhaps they should have learnt from this and designed a fun game that didn't require so much grinding.

[Cthulhu 2020]

This is a first of its kind venture, and there will probably be many legal and economical altercations between the user, Blizzard, the IRS, and the judicial system.

However, I will say this, so far there are no laws about virtual goods in the US, on the federal or state level. The EULA you signed is valid and will hold up in a court since it has not broken any laws. Very few EULAs and ToS contracts that do not break any laws have been overthrown in court, and the ones that have contained extreme and unreasonable terms that the signer of the contract did not realize was there.

Basically what's in the EULA, is that all data on Blizzard's servers, including items, gold, and characters are property of Blizzard. What you bought from Blizzard is a license to play the game. The RMAH EULA clearly states that you do not own any items, and that Blizzard is allowing you to transfer contractual license of items on your account to another person's account at a profit to yourself, and a fee from Blizzard. It also states that Blizzard can and will alter items, and should items be altered in a negative way that devalue them that you are not entitled to a refund or compensation from Blizzard, as you do not own these items.

I think it will be interesting to see the first few court cases that come around as a result of Blizzard's RMAH, as it will set the ground for future ventures that other companies make into virtual property. I forsee laws being made in the near future in regards to virtual goods.

[Prokne]

As far as I can guess Blizzard's biggest obstacle to implementing the RMAH in multiple countries was ensuring them that they would get tax revenue from in game sales. I'm pretty sure the $1 per item doesnt cover sales taxes, but 15% for commodities could cover it depending on your country. In any case Blizzard would have to pay corporate taxes on all the profits they make from their cut off the AH.

For individuals selling items, unless you cash out you really arent making any money to be taxed. At least not in any amount that really matters. Your government doesnt care that you made an extra $50 to pay for your WoW subscription or get a free game from Blizzard. People making hundreds and thousands of dollars will be cashing out to Paypal and then probably transferring the money to a bank account. Paypal should have some sort of tax reporting to the IRS but if it doesnt people will need to report it o their tax return.

As far as the worth of items changing, that really isnt a tax issue. Its the same as trading stocks or any other market price commodity. The IRS takes a percentage of your income but they dont have any power over how you make it and employees are probably not allowed to use the RMAH to sell gear just like radio station employees cant win contests from their radio station.

[kenn9530]

From a business/legal perspective I think whoever pulled the trigger on the RMAH idea should be fired. Even though players sign a TOS agreement, I think Blizzard has opened itself up a slew of issues that a TOS cannot address or provide adequate protection for. Just because you list something in your TOS and players agree to it, doesn't mean that the IRS/Government is going to play along with it and absolve you of all wrong doing.

I am accountant and in my job I have to be extremely careful at how we handle certain issues related to payments to individuals and corresponding tax implications. Most accountants, or people that have had tax issues involving the IRS, know that the IRS is not an entity you want to mess with. They can indescriminately clean out your bank accounts, seize assets, garnish wages, etc., etc., etc. IRS = GOD on earth. If someone makes $600 or more a year through Blizzard, Blizzard must report this to the IRS and to the individual (Form 1099). If paypal is doing this on that for Blizzard, the 15% makes sense. What about the Battlenet side? The IRS does not allow you to pass on your responsibilities of reporting to the individual.

I also think they have opened themselves up to lawsuits/investigations resulting from "patching" the game. If they nerf/buff stats, doesn't this affect the prices/value for gear on the RMAH? I can't help but feel they have built a way into D3 for the developers to fleece down the players. What if a developer is able to "make" gear with any stats they want and then sell it for huge profits on the AH? What if employees knows about game changes prior to the public knowing? Isn't it essentially equal to "insider trading" if an employee dumps gear with impending nerfed stats on the RMAH at inflated prices or buys gear with implending buffed stats at discounts prior to the changes being announced to the public? How is Blizzard going to monitor any of this?

Blizzard needs to quit trying to be something they are not and should get back to what they used to be good at...making games.

the money you transfer to battle.net balance can only be used on the blizz website or to purchase more stuff in the D3 AH, the battle.net balance cant be transferred to real money to use as you want. If you transfer straight to paypal then a percentage of the earnings get taken so the rest is yours, i dont see any reason to declare this as further earnings due to the percentage you lose transferring it all the way to your bank account.

[Deleted]

while i don't necessarily agree with what the RMAH brings to the game, do you really think blizzard would have added it if the legal side was as complicated as you explain?

from what i understand, selling your unwanted items through any means, albeit real life or digitally has no implication on tax. if i hold a garage sale and sell my junk, similarly to what i'd do in the RMAH, i wouldn't have to pay tax there. as far as i'm aware you only pay tax if it is a regular occurrence of transactions or you are purposely buying items to sell on for profits.

if you are doing this then you need to maintain records of all transactions and declare profits as a source of income and the tax office would sort it out. if you don't declare your income and are earning regular amounts of money then you are technically committing fraud, so good luck to you.

it's depending on what country you are from as well which makes it different for everyone.

[Brangh]

from what i understand, selling your unwanted items through any means, albeit real life or digitally has no implication on tax. if i hold a garage sale and sell my junk, similarly to what i'd do in the RMAH, i wouldn't have to pay tax there. as far as i'm aware you only pay tax if it is a regular occurrence of transactions or you are purposely buying items to sell on for profits.

I believe the IRS holds that any asset sold for more than it's depreciated value is taxable, e.g., anything you sell at a garage sale (phsyical or online) is taxable if you make more on it than what you paid for it. The rules are about the same for online sales:

http://www.irs.gov/businesses/small/...202939,00.html

I think the issue here is, since we do NOT own the item we have sold on a Blizzard server, have I really engaged in a sale? Or is this a commission I get as the middleman between moving Blizzard's property to a new user?

edit: Apparently I was wrong:

http://us.blizzard.com/en-us/company...3rmah_tou.html
6b. "Once Blizzard notifies someone that he or she won an auction, Blizzard will purchase the license to use the Loot from the seller and then sell a license to use the Loot to the winner of the auction."
I guess the seller does bear all liability for the transaction.

[Speedlance]

From a business/legal perspective I think whoever pulled the trigger on the RMAH idea should be fired. Even though players sign a TOS agreement, I think Blizzard has opened itself up a slew of issues that a TOS cannot address or provide adequate protection for. Just because you list something in your TOS and players agree to it, doesn't mean that the IRS/Government is going to play along with it and absolve you of all wrong doing.

I am accountant and in my job I have to be extremely careful at how we handle certain issues related to payments to individuals and corresponding tax implications. Most accountants, or people that have had tax issues involving the IRS, know that the IRS is not an entity you want to mess with. They can indescriminately clean out your bank accounts, seize assets, garnish wages, etc., etc., etc. IRS = GOD on earth. If someone makes $600 or more a year through Blizzard, Blizzard must report this to the IRS and to the individual (Form 1099). If paypal is doing this on that for Blizzard, the 15% makes sense. What about the Battlenet side? The IRS does not allow you to pass on your responsibilities of reporting to the individual.

I also think they have opened themselves up to lawsuits/investigations resulting from "patching" the game. If they nerf/buff stats, doesn't this affect the prices/value for gear on the RMAH? I can't help but feel they have built a way into D3 for the developers to fleece down the players. What if a developer is able to "make" gear with any stats they want and then sell it for huge profits on the AH? What if employees knows about game changes prior to the public knowing? Isn't it essentially equal to "insider trading" if an employee dumps gear with impending nerfed stats on the RMAH at inflated prices or buys gear with implending buffed stats at discounts prior to the changes being announced to the public? How is Blizzard going to monitor any of this?

Blizzard needs to quit trying to be something they are not and should get back to what they used to be good at...making games.

In norway you don't have to pay taxes when you sell a car, I don't think you do that in US of A either, same with sites like ebay, the items sold are already taxed from before, how would this be any different with the rmah, as you're not employed at blizzard you're only selling items. Basicly any item that has been used by the owner or family of the owner of a household is not taxed.

[Deleted]

In norway you don't have to pay taxes when you sell a car, I don't think you do that in US of A either, same with sites like ebay, the items sold are already taxed from before, how would this be any different with the rmah, as you're not employed at blizzard you're only selling items.

http://www.moolanomy.com/1126/do-you...lling-on-ebay/

And yes, you do have to pay taxes on eBay income…at least by law you do. However, eBay does not issues 1099′s and they do not report sales to the IRS. Most people who sell a few things probably don’t report it, but if you start selling a lot, I would most certainly claim it on my taxes.

[Speedlance]

http://www.moolanomy.com/1126/do-you...lling-on-ebay/

And yes, you do have to pay taxes on eBay income…at least by law you do. However, eBay does not issues 1099′s and they do not report sales to the IRS. Most people who sell a few things probably don’t report it, but if you start selling a lot, I would most certainly claim it on my taxes.

An income would mean you earned money on the sale, but very rarely will you sell a used item for more then you bought it for, unless it's a year 1490 goldcovered vase.
So you won't get any tax claims for selling stuff at loss on ebay.

[ultimar235]

From a business/legal perspective I think whoever pulled the trigger on the RMAH idea should be fired. Even though players sign a TOS agreement, I think Blizzard has opened itself up a slew of issues that a TOS cannot address or provide adequate protection for. Just because you list something in your TOS and players agree to it, doesn't mean that the IRS/Government is going to play along with it and absolve you of all wrong doing.

I am accountant and in my job I have to be extremely careful at how we handle certain issues related to payments to individuals and corresponding tax implications. Most accountants, or people that have had tax issues involving the IRS, know that the IRS is not an entity you want to mess with. They can indescriminately clean out your bank accounts, seize assets, garnish wages, etc., etc., etc. IRS = GOD on earth. If someone makes $600 or more a year through Blizzard, Blizzard must report this to the IRS and to the individual (Form 1099). If paypal is doing this on that for Blizzard, the 15% makes sense. What about the Battlenet side? The IRS does not allow you to pass on your responsibilities of reporting to the individual.

I also think they have opened themselves up to lawsuits/investigations resulting from "patching" the game. If they nerf/buff stats, doesn't this affect the prices/value for gear on the RMAH? I can't help but feel they have built a way into D3 for the developers to fleece down the players. What if a developer is able to "make" gear with any stats they want and then sell it for huge profits on the AH? What if employees knows about game changes prior to the public knowing? Isn't it essentially equal to "insider trading" if an employee dumps gear with impending nerfed stats on the RMAH at inflated prices or buys gear with implending buffed stats at discounts prior to the changes being announced to the public? How is Blizzard going to monitor any of this?

Blizzard needs to quit trying to be something they are not and should get back to what they used to be good at...making games.

Massive company like Blizz has lawyers and specialists far smarter than you. They have all their bases covered.

Blizz won't make items and sell them either. Even if they do, so what? Other games sell items and characters and nerf/buff them all the time.

[Ofoz]

In norway you don't have to pay taxes when you sell a car, I don't think you do that in US of A either,

In Virginia the seller doesn't have to pay taxes but the buyer does when he gets the title transferred. These are state taxes, not federal.

[Prokne]

the money you transfer to battle.net balance can only be used on the blizz website or to purchase more stuff in the D3 AH, the battle.net balance cant be transferred to real money to use as you want. If you transfer straight to paypal then a percentage of the earnings get taken so the rest is yours, i dont see any reason to declare this as further earnings due to the percentage you lose transferring it all the way to your bank account.

The 15% they take out when you transfer to Paypal is a fee, not taxes. Just because you make 15% less money doesnt mean its not taxable.

[Kivimetsan]

Fuck government.

When did I ever sign a piece of paper that says ill pay taxes? Oh that's right... I wasn't even born yet.

Government is illegitimate, once everyone realizes this, we will truly be free.


Keep this on topic. Please don't derail into discussions of government; this is not the place.

[bringitback]

Fuck government.

When did I ever sign a piece of paper that says ill pay taxes? Oh that's right... I wasn't even born yet.

Government is illegitimate, once everyone realizes this, we will truly be free.

Ya cause a country with no tax revenue will surely thrive.

Would not surprise me if blizzard has to report RMAH sales info to the IRS each year. I'm about to graduate with my bachelors in accounting and i would hate to be the one in charge of taking care of tax work related to the rmah.

[Drakesong]

It depends on the specific laws of the country. Period.
Some States will tax the money you make from RMAH, some others may even tax the RMAH operation. Most modern States are not even prepare for this reality, so they may only tax the income.
But in my experience here, keep the legal discussions of the forums. Gamer kids cannot deal with such discussions.

[Kanx]

I actually had a look in to this today after a friend mentioned it.

I'm not self employed, and i don't have an income from outside my employer. If you're in a similar situation, you need not do a self tax assessment unless you're earning over £10,000/year from other 'sources'.

If you're self employed, i'd presume RMAH earnings would go on to your self assessment.

[Cairhiin]

I would wager that a lot of people don't declare their earnings really. Though legally people should as it's income.

There are lots of people who don't declare their earnings from online businesses, ebay, etc.



This is most definitely what the "developers" had in mind when designing the RMAH. Either they took the cut from item sales or 100 dodgy websites will do it for them. Perhaps they should have learnt from this and designed a fun game that didn't require so much grinding.

Diablo and no grinding? That's the whole point of Diablo games really. Maybe this game is just not for you?

[Nocuous]

So far there have been some interesting thoughts to the conversation. I'd like to clarify that we are discussing income tax not sales tax here. Sales tax is much easier to calculate and track for Blizzard and probably a non-issue when it comes to this discussion.

[darklady]

I'm sure Blizzard or some Blizzard authority will be providing 1099's to people who use the RMAH, especially to those who opt to have the money go to their battle.net balance. I'm a small business owner, so I opted to have my RMAH sales go to my paypal business account. In 2012, Paypal became required to report income to the IRS if a merchant had 200 transactions and those 200 transactions brought in revenues of at least 20K. Both have to apply for Paypal to report. Even then, that still doesn't take away seller responsibility to report income to the IRS. It never did. Anytime you make money in the US, you owe taxes on it, and it's your responsibility to report it. Period. So, if you're making money off the RMAH, and not reporting it to Uncle Sam..or Uncle Sugar we like to call him, you're doing it at your own risk. Obviously I'm talking about the USA.