And Now SL's Economy is in F---- Trouble

Hawt Sommer

And Now SL's Economy is in F---- Trouble

Postby Hawt Sommer » Fri Feb 14, 2014 12:05 pm

The Internal Revenue Service (IRS) requires Linden Lab to collect and retain Form W-9 (for U.S. residents) and Form W-8BEN (for non-U.S. residents) at certain transaction volumes. If you reach the transaction threshold and we do not have your completed and signed W-9 or W-8BEN on file, we are required to withhold funds from your account (at the current rate of 28% of your gross amounts received). Additionally, for U.S. residents with 200 or more transactions with a total amount in excess of $20,000 in a calendar year, we are required to file a Form 1099-K with the IRS reporting those transactions for that year.


So how do you feel about America Taxing your money and feeding more of it's programs with your cyberspace dollars my European business comrades?

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Elle Couerblanc
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Re: And Now SL's Economy is in F---- Trouble

Postby Elle Couerblanc » Fri Feb 14, 2014 12:08 pm

I am not European so I cannot comment based on that perspective. But you would not believe the number of meltdowns I have witnessed in other social media venues in Second Life over this topic. Why are people so shocked about this? Second Life was prime to become some sort of money laundering scheme for some individuals at some point.

Can you imagine how Breaking Bad would have played out if Walter White was told about Second Life? :P

The days of SL being a cash cow for some folks is over!!
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Hawt Sommer

Re: And Now SL's Economy is in F---- Trouble

Postby Hawt Sommer » Fri Feb 14, 2014 12:16 pm

They have actually been planning on doing this since 2009 with the new administration. Very nice slap in the face for many while we are into this second term's ... That was excellent planning.

http://www.neowin.net/news/irs-to-tax-second-lifeworld-of-warcraft-earnings-3

They may go back seven years worth of your transactions and all my good friends out there might owe the USA some back-taxes.

:D

It's ok. All the money is going to a good cause. You trust the US government.. Right?
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Oor
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Re: And Now SL's Economy is in F---- Trouble

Postby Oor » Fri Feb 14, 2014 12:46 pm

So you distribute 10% of each marketplace transaction to each of 10 alts and swap your sales boards out weekly with a different owner.

*shrug*
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Elle Couerblanc
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Re: And Now SL's Economy is in F---- Trouble

Postby Elle Couerblanc » Fri Feb 14, 2014 1:10 pm

Hawt Sommer wrote:They have actually been planning on doing this since 2009 with the new administration. Very nice slap in the face for many while we are into this second term's ... That was excellent planning.

http://www.neowin.net/news/irs-to-tax-second-lifeworld-of-warcraft-earnings-3

They may go back seven years worth of your transactions and all my good friends out there might owe the USA some back-taxes.

:D

It's ok. All the money is going to a good cause. You trust the US government.. Right?


I do remember that now. I think at that point they were relying on people to follow their local laws and report it as income on their own.
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Re: And Now SL's Economy is in F---- Trouble

Postby Glaucon » Fri Feb 14, 2014 1:29 pm

I kinda doubt that this was something any politician was planning to spring on us poor SL players. Probably just people within the IRS doing this.

And yes, probably pretty easy to avoid paying these taxes, just yet.

Question: Why would one be outraged about tax authorities forcing people to pay their taxes?
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Elle Couerblanc
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Re: And Now SL's Economy is in F---- Trouble

Postby Elle Couerblanc » Fri Feb 14, 2014 1:47 pm

Glaucon wrote:Question: Why would one be outraged about tax authorities forcing people to pay their taxes?


Mainly because they froze their L and didn't allow transfers to Pay Pal. The impression I am getting is a good chunk of these big money makers in Second Life really have no real life business sense whatsoever. A few claim they don't understand the forms etc and so on. Some are upset because they will have to reveal RL info to the Lab.
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Garian
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Re: And Now SL's Economy is in F---- Trouble

Postby Garian » Fri Feb 14, 2014 2:04 pm

According to this: http://wiki.secondlife.com/wiki/Linden_ ... tation_FAQ

If you are required to submit documentation to Linden Lab, we will email you


Wouldn't it be more helpful to know the details rather than wait for a possible email?

If I have several Second Life accounts that do not meet the thresholds individually, but do so when combined, will my accounts be affected?
Yes


It also goes into the 1099 with paypal, but that just seems to add confusion, because aren't people doing their taxes in relation to paypal anyway, in order to even cash out?
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Hawt Sommer

Re: And Now SL's Economy is in F---- Trouble

Postby Hawt Sommer » Fri Feb 14, 2014 2:21 pm

Elle Couerblanc wrote:
Glaucon wrote:Question: Why would one be outraged about tax authorities forcing people to pay their taxes?


Mainly because they froze their L and didn't allow transfers to Pay Pal. The impression I am getting is a good chunk of these big money makers in Second Life really have no real life business sense whatsoever. A few claim they don't understand the forms etc and so on. Some are upset because they will have to reveal RL info to the Lab.


I think it's like any other business owner. The IRS is sniffing around their yard and making assessments, Then will come the Tax bill if you haven't been paying your taxes, meaning you claim that income on your personal or business income. It's considered Business income and "Non Hobby" income at a certain level. They may even go back seven years if they smell money.

....then comes your tax bill, penalties... fines... maybe even some repossessions or jail time- We are talking the IRS remember.

But it's all ok. I'm sure most of you are very lawful people and payed all your money to the USA you owe them. :P

And Oor! That tax dodging scheme is pure genius... But soon most everyone won't have any identity and a lot of SL's businesses are going to start looking like run down hillbilly yard sale meth labs; hence my mentioning of the SL economy might be in trouble.

Thinking there might be some changes because of this that will be quite noticeable.
Last edited by Hawt Sommer on Fri Feb 14, 2014 2:25 pm, edited 1 time in total.
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Re: And Now SL's Economy is in F---- Trouble

Postby Danika Stenvaag » Fri Feb 14, 2014 2:24 pm

I've raised about $20,000 to $22,000 USD during the sim life of Valkyrie Forest - donations from my sim residents, from a few angel friends, and from visitors and regulars from all over Gor and rentals from my market - but I've spent every penny of those donations on the sim. So it all goes back to the Lindens. I have never used any of that money on myself, never kept a cent for myself, never bought anything for myself with those funds. I keep it honest. With all the conversion fees and other tier payments I've been giving the Linden gods in tribute, I assumed they were the ones paying the taxes as they are the ones profiting, not me. I'm not doing this to make money. I'm all for fair taxation, I'll pay my fair share, but if I get excessively punished for raising funds to pay the sim costs, I'll just say screw it and close the sim down. It was an awesome run, but I'd rather be surfing anyways. I keep my sim open coz it's popular and brings a lot of people fun and pleasure.

What really screwed things up is Linden Labs made it even harder to pay them without having to deal with extra fees. They don't except payments using their own Lindens, they want cash dollars. So I have to convert those Lindens to dollars and Lindens collect a fee every time I make those conversions just so I can pay them cash. It also used to be easier to buy cash credit using my checking account or PayPal and putting that cash directly into my Second Life dashboard account so Linden Labs can collect directly. They don't allow that anymore. Now I have to buy Lindens and pay them a fee, then convert those Lindens back to cash and pay Lindens another conversion fee, just so the cash will sit in my SL dashboard for the Lindens to collect... It's like paying extra for the privilege of paying them. Annnd.... if I upload donated Lindens to my SL dashboard or PayPal, I have to first pay them a conversion fee to turn that into cash, and a transfer fee when sending to PayPal, again, just so I can have the privilege of paying the Lindens their tier. Linden Labs are masters at getting in their own way and frustrating and driving sim owners away.

Last year, PayPal suffered a huge crash from a power outage in the Bay area, and Lindens instantly took out thousands of dollars from my PayPal account by accident when it was time to pay them the $300 tier. It was like pulling teeth getting my money back and they acted like it was no big deal and dragged their feet. Took way too long to get my money back. That made me skittish about allowing SL automated access to my PayPal to pay the tier. And I didn't trust PayPal much either coz even after all my calls to them, they treated me like a suspect even knowing they had a power failure. I had to bring Chase Bank into the fray to speed things up and get resolution. So for a long time after, I used the SL Dashboard instead, hence the extra fees to Lindens. I've just recently switched back giving Lindens automated access to my PayPal and checking account but I'm not confident about it. To add insult to injury, it takes about 5 working days for me to send cash from converted Linden donations inworld to my PayPal, and yet Linden's taking cash from me is instant - they have no problem and no wait taking cash from me. Total turn off. They're murdering their cash cow.
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