Noodlescratchers about the RMAH

General Discussion
For all the economist/CPA Blizzard fans out there:

Has anyone looked into the legal side of the real-money-auction-house from a standpoint of paying income taxes on their earnings? Am I going to get a W-2 from Blizzard? Maybe, 1099 forms from frequent customers and/or one-time big purchases? Can I deduct accidentally salvaging legendary items as a business expense, or commutes to internet cafes as transportation expenses? Will I be able to shield my income by opening my paypal account in Switzerland or the Grand Caymans? Would my earnings be subject to garnishment or other kinds of liens if I had to pay child support? Could we as a gaming community conceivably open up a "Diablo 3 Credit Union" for loans on big purchases?

More importantly, does Diablo work for the IRS? Talk about Lord of Terror.

Makes me go "hrmmm??"
This is a dumb question.

This is like asking if eBay needs to send you a W2 if you sold items on their service. The answer is no, and so obviously the D3 RMAH will behave the exact same way.
Okay so we have a "Yes" and then a "This is a dumb question".

I understand how eBay works, and it's fair to see how Blizzard would operate in exactly the same manner. That doesn't mean you're not supposed to pay taxes on money you make off eBay.

Also I didn't see that post before Bigfish, thanks for pointing it out. Gotta spend my time doing something while waiting for my beta inv =/
trades on the rmah are done with bliz currency that is given a dollar notation. when you cash out bliz gives you real money.. that is when you can get taxed
You know... at a casino when you win above a set amount of money the casino is required by law to report your winnings, I don't see why it wouldn't be similar for either Ebay or Blizz. Just guessing here though, I have never sold something expensive on ebay.
You're not employed by them so you don't need to submit it as a W-2. You are supposed to just keep track of it as a part of your earnings separately, I'm sure. If you decide not to keep track of it or report it, there's a good chance you won't ever be held accountable unless you somehow make thousands of dollars off it.
This is a dumb question.

This is like asking if eBay needs to send you a W2 if you sold items on their service. The answer is no, and so obviously the D3 RMAH will behave the exact same way.

You apparently missed the news about how eBay now has to send out 1099-K forms to sellers who sell over 200 transactions and $20,000 USD in a tax year.

Granted, while you might sell over 200 items in one year, you're probably not going to make over $20,000 a year from Diablo III. Even then, I'm inclined to believe that these rules will only apply to transactions where you cash out -- which is part of Blizzard's motivation behind the Blizzard Balance, and how you must choose to cash out or add to your balance at the time of the sale, but cannot directly cash out your balance at a later date. They're doing whatever is legally necessary to make the Blizzard Balance not actually a currency, much like the various console "currencies" (Wii points, MS points, PSN wallet), so as to minimize the number of actual transactions. If a transaction only takes place within their system, it's not subject to taxes or various regulations -- or so the theory goes. Blizzard, and their players, will only be responsible to the appropriate government entities for money that enters or leaves the system.
Assuming you are cashing out, income is income and you are obligated to report it assuming your gross income for the year is above the value the government requires for taxes. It doesn't matter how, or where you got that income. Income is income.

09/22/2011 03:55 PMPosted by Friendzee
You're not employed by them so you don't need to submit it as a W-2. You are supposed to just keep track of it as a part of your earnings separately, I'm sure. If you decide not to keep track of it or report it, there's a good chance you won't ever be held accountable unless you somehow make thousands of dollars off it.


Pretty much this.

Think of income generated off the RMAH, similar to how income is generated from self employment. The people contracting you out don't give you forms to fill out and submit. Rather, it's your responsibility to keep track of your earnings and report them at years end. It's no different than any income you would generate elsewhere, simply because the venue is located within a video game world.

The chances that the IRS (or revenue agency, if you're like me and don't live in USA) will find out, is slim to none, but technically speaking you are obligated to pay taxes on any income you generate (again, assuming you're not below the gross income required for taxes)

Also keep in mind, this only applies if you cash out. Honestly, Blizzard should think about switching out the $ in the battle.net currency, and use a custom currency icon to prevent confusion.

edit: Sorry for the redundancy :D

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