Congress is investigating whether the IRS should tax online

[tIIsuggas]

I know it doesn't mention the Sims, but it could have an adverse effect on Sims paysites if implemented.

http://www.pcworld.com/article/id,128270-pg,1/article.html

NO TRAINS ALLOWED

[lnichols]

It was only a matter of time. The IRS smelling money is like a pack of sharks smelling blood. But it may be a good thing for us gamers. If they make it too complicated to sell "goods" we might see less people jumping on the bandwagon on a whim.

[Noodle]

If they are collecting money because they are selling their hard "work" and claiming they deserve it because of all the time it took them to make it, then they should report it as income. Fill out a 'schedule C' and report expenses as well (such as bandwith costs). They would most likely show they are actually losing money with their "business", thus collect a bigger tax return...it could be a good thing for them.

[BlackPearl]

THAT is rather interesting.  It looks like most of that is from (taxation) on winnings from online gaming.

[BlueSoup]

Would this even affect anyone not in the US?  Because, though some may not believe this, the US is not the centre of the Universe.

[Kid]

Would this even affect anyone not in the US?  Because, though some may not believe this, the US is not the centre of the Universe.

That's not what my social studies teacher and president have lead me to believe, so you must be in error.

I'm sure that there are international tax laws that would effect gamers outside of the U.S. For example, if the money were made while playing on a server located in the U.S. then it may possibly fall under the proposed plan.

[Noodle]

Would this even affect anyone not in the US?  Because, though some may not believe this, the US is not the centre of the Universe.

It won't financially affect anyone, anywhere. It might make more paper work for US tax payers, but there will be loopholes and no one will really pay any taxes. It just makes the congressmen feel uppity.

[lnichols]

Just trying to tax online businesses would be a logistical nightmare. The thousands of porn sites, the online casinos that are hosted on independent islands but whose customer base is largely US citizens. Etc..

I really don't see it happening. But they can dream.

[Pescado]

I'm not even sure how I'd pay such a tax, considering that I keep all online dealings strictly seperated and never, ever, bring them into contact with real stuff. Would I have to get an ITIN just to report this? Would they even ISSUE one to me? I'm honestly uncertain how they'd collect it, or how I'd report it or pay it. This seems to be a fundamentally flawed cockamamie scheme which I can't see even working.

[SparklePlenty]

Several points. The current tax laws cover this already.

If you are a resident of the United States, you are obligated to pay income taxes. The IRS has the means to audit your spending and your reporting. This is what they do. They are good at it. They will come after you.

Secondly, the IRS doesn't care where your income comes from if you are a resident of the United States. You still have to pay income taxes on it. You can earn it overseas, virtually or "off the books." If they don't get their cut, they will come after you.

If you are operating a business online or in physical address, if you are a resident of the United States, you are obligated to pay sales tax and/or income tax.

There is no level to which they will not stoop to get their cut. And if Congress says, "Oh, yeah, be sure to get that extra money floating out around there," they will get their cut. This is why residents of North Carolina have to pay sales tax on ANYTHING they buy over the internet, even if the seller is not based in North Carolina and thus not obligated to pay taxes in North Carolina.