IRS, Congress Hound Online Gamers

Dennis Faas's picture

It's been over seven years since I first laughed at Diablo II players posting their weapons and other items on eBay.

It seemed strange to me that anyone would pay real-world money for virtual artefacts, tools that could only help a person in that one specific game. It takes a very devoted player to invoke his or her everyday bank account for a simulated Blade of Fury (or something of that nature).

But, people bought up these items. Diablo II remained a popular application on Blizzard's multiplayer page ( for a very long time, and today retains a surprising following. However, it has largely been eclipsed by more ambitious and traditional role playing games, those of the massive multiplayer variety (MMORPG).

In games like World of Warcraft, there are plenty of players who take every weapon and every item very seriously. More than ever, a virtual economy has emerged, with people exchanging real money for pixelated items. Although it sounds a bit ridiculous to those not involved in the MMORPG community, it's a legitimate marketplace.

Unfortunately, the Internal Revenue Service believes it now deserves a slice of the pie. Congress is now debating whether or not in-game transfers of cash for items can or should be taxed. With the MMORPG market and virtual transactions exploding in popularity, the noise has, perhaps expectedly, drawn the attention of the United States federal government. (Source:

Complications lay ahead. If forced to tax such sales, game publishers may have to work directly with the IRS in order to legitimize the virtual marketplace. That could drastically delay launches and hike the price of software, as game-makers attempt to track transactions. (Source:

Trust the IRS to turn game makers, modern day Willy Wonkas, into despicable tax men.

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