Real Identity

My advice is, nothing is anonymous on the internet.

I's can sees your IP addressy!

Why would one care if someone know him IRL anyway?

As weird as my life is i have nothing to hide personally, there is no way anybody can hurt me

If you are sued or if you are in a messy divorce, the first thing your attorney will tell you is to keep your mouth shut. If you use your real name and likeness on SL, or your real name on this or any other forum things you say can be used against you. For example, if you are involved in a divorce and you talk on SL or on this or another forum about your infidelity, and the other side finds out, you can expect that it will be used.

And also remember that even if something cannot be admitted as evidence in court in can still be on the TV news.

I can't, of course, use my real last name on SL because the system requires that I choose from their list. I do combine my first and my maiden middle name (no last names were available with Mary). My avatar looks like me. I assume that my actions and words in SL are public and will be in the news if they are criminal or just plain juicy enough for the news.

My use of a similar name and likeness on SL, and my real name on other (usually political or professional) forums is to show that I have nothing to hide.

There is no "reasonable expectation of privacy" in SL, and even that doesn't matter to the press, who can use whatever they get.

Mary

Sorry we have two threads running here, but in regards to those making an income off SL, I don't see how SL items could be regulated since to the purchaser they are in essence useless to the purchaser outside of SL. So, since these items are of no worth outside of SL, it seems like LL needs to think up a better system such as making SL a game where you win gifts or blessings by solving something for example or just random blessing.

However, I do think that SL is going Paypal only to pay out payees as a way for the IRS to keep better track of what is cashed out of SL.

But, I'd like to say regarding income tax info, it never hurts to ask your tax accountant, especially now with Paypal being the go between.

And Ebay is quite different in that if a used item is sold, it might be sold at a loss of the original price paid, not a gain.

Speaking as someone who's had to clean up after a bloke used my identity to rip off several thousand dollars worth of gear... I just hope you never have to find out otherwise.

Speaking as someone who's had to clean up after a bloke used my identity to rip off several thousand dollars worth of gear... I just hope you never have to find out otherwise.

Regarding income tax: The fact that money flows through PayPal doesn't really make any difference taxwise. It is just a convenient way of handling payments. Not all payments through PayPal involve taxable income. For example, the other day at lunch a I picked up the tab with my credit card and a co-worker then sent me her share through Paypal. We both have accounts. There was absolutely no tax concern-it was just as if she had written a check which I deposited The tax situation is when you convert more $L to $ than you converted $ to $L. Of course, some RL expenses may be deducted from the SL income, for example, if you bought a new video card for the express purpose of your SL business only.

Somehow, I doubt that many people are making a profit from SL, particularly when considering related expenses. The fact that LL does not collect Social Security numbers to report income to the IRS probably reflects their lack of expectation of profit from SL.

... but it's a bit more complicated.

It's not unusual for businesses to run a loss the first couple of years.

Finally, if you simply accumulate L$ without cashing out, there's still a possibility that the IRS would argue that's barter income.

You've made some good points, but it's a bit more complicated. It's not unusual for businesses to run a loss the first couple of years. So there might still be some (good) tax consequences even if you converted more US$ to L$ than back. But it could also be, as someone else pointed out, that you're mixing business and personal L$ together. In that case, you could still owe tax even if you spent more money buying L$. Finally, if you simply accumulate L$ without cashing out, there's still a possibility that the IRS would argue that's barter income.



It has nothing to do with their opinions on profit or loss. They don't collect SSNs because they haven't been required to. Ebay/Paypal are affected by new reporting laws. I don't know whether the law was written in a way that would apply to SL, too, but even if it does, it would be based on the user's gross sales (not profit/loss). See, for example, this Wall Street Journal article: http://online.wsj.com/article/SB121737220325394931.html.html?mod=2_1581_topbox.

My computer is hooked up weird at the moment, so could you copy and paste some pertinent snippets from that WSJ article here? I'd appreciate it if you could do that as I'm wondering what the new Ebay laws are. Have the laws changed from where you don't have to be an Ebay store selling new items 'cuz the last time I sold on Ebay for profit my tax accountant said you have to be an Ebay store and have had made a minimum of $5,000 profit because a lot of what Ebay is could be compared to garage sale business' and selling your junk (which is another persons treasure) for pennies on the dollar, the IRS could care less.

You need a new tax accountant. If he or she is a CPA, do the profession a favor and report him/her to the state organization and licensing authority as well. That is simply bad advice. If he or she was talking about gross sales with knowledge that the profit margin was small, then at least the advice wasn't completely bogus, but $ 5,000 of profit is of interest to the IRS at pretty much any time, and it takes one bad transaction with one person dropping the dime to get you in hot water.

As for LL collecting SSANs, they are not the payer - they facilitate the disbursement of funds. As such, they have no responsibility to report 1099 income or report cash disbursements per banking regs - that lies with Paypal and receiving banks, if the limits are triggered. They are like a farmers' coop that provides a place to do business, but does no more than collect rent.

I should have added that the above "tax advice" was years ago when eBay first started having stores. If one had a store, it was definitely seen as a business and not a hobby income to pay for your hobby. Anyhow, I could be remembering it all wrong as it has been a long, long time since eBay has had eBay stores that's why I said "ask you tax account" 'cuz these things change all the time.

I took a little time to research income taxes in regards to eBay. There have been some issues with eBay in prior years regarding whether you were creating a "hobby income to pay for your hobby" or actually usually the money as livelihood.

I'd guess that issue is true with SL too (hobby or business?), but always ask your tax account.

I think that the following quote from the WSJ article can be considered fair use:
"The provision, part of the housing rescue package that President George W. Bush is expected to sign within days, will require PayPal and other processors of online payments to report annual gross receipts to the IRS for all but the smallest online merchants."
from http://online.wsj.com/article/SB121737220325394931.html.html?mod=2_1581_topbox

Note that this is a new law, passed by Congress but not, at the time the article was written, signed into law. If signed it will take effect in 2011, according to the article.

Another quote:
"The payment processors will be required to file a 1099 form for each merchant to the IRS and to the merchant. They won't have to file for merchants with less than $10,000 in gross sales and less than 200 transactions in a given year. "

I haven't read the bill, I will try to look it up when I am back in the office.

An important distinction: there is a difference between what you legally owe in income tax and what the IRS cares about. Technically, a small sale for about $1 (US money) is taxable, even if you use the $L for unrelated purchases inworld. However, does the IRS care? It is far easier for an attorney or tax adviser to look tell you the exact law than to tell you whether or not the IRS really cares (that could depend upon other factors, such as what else they may have caught you for

Since I already file a form C (business income) for misc. income from the internet (many small sources) I would put down even a dollar from a different source. How much someone who has no other business or internet income can make before reporting it is up to them-I won't give any opinion.

As for selling on e-bay, it doesn't matter if you have a "store"; the only thing that really matters is the amount involved.

If in doubt, I would err on the side of caution. If the IRS finds income that you did not report it could cost you not only penalties but the hassle, time, and legal expense of future audits. As well as lost sleep.

Mary

As I pointed out earlier, theoretically you would owe income tax even if you do not convert L$ to $ but used them in-world to buy things unrelated to your business. It is much the same as if a programmer for a video game company took some of his pay in the form of video game software and hardware.

As for SS numbers, most affiliate sales type programs (Amazon, etc.) and others that are designed for people to make a profit collect SS numbers. This started long ago, before the law in the WSJ article.

for all the Paypal merchants that don't want to share their TINs with Paypal.

I wonder if an EIN would be acceptable in this case. It's useful for anyone doing business at this level to have an EIN in any case.

Good point. I refer to SSN, which about everybody has. But anyone can get a Taxpayer Identification Number (I am not familar with Employer numbers, not having employees outside of the firm I work for). A TIN (or EIN) allows you to avoid giving out your SSN to companies you do business with. To the IRS it is the same.

I think that the following quote from the WSJ article can be considered fair use:
"The provision, part of the housing rescue package that President George W. Bush is expected to sign within days, will require PayPal and other processors of online payments to report annual gross receipts to the IRS for all but the smallest online merchants."
from http://online.wsj.com/article/SB121737220325394931.html.html?mod=2_1581_topbox

Note that this is a new law, passed by Congress but not, at the time the article was written, signed into law. If signed it will take effect in 2011, according to the article.

Another quote:
"The payment processors will be required to file a 1099 form for each merchant to the IRS and to the merchant. They won't have to file for merchants with less than $10,000 in gross sales and less than 200 transactions in a given year. "

I haven't read the bill, I will try to look it up when I am back in the office.

An important distinction: there is a difference between what you legally owe in income tax and what the IRS cares about. Technically, a small sale for about $1 (US money) is taxable, even if you use the $L for unrelated purchases inworld. However, does the IRS care? It is far easier for an attorney or tax adviser to look tell you the exact law than to tell you whether or not the IRS really cares (that could depend upon other factors, such as what else they may have caught you for

Since I already file a form C (business income) for misc. income from the internet (many small sources) I would put down even a dollar from a different source. How much someone who has no other business or internet income can make before reporting it is up to them-I won't give any opinion.

As for selling on e-bay, it doesn't matter if you have a "store"; the only thing that really matters is the amount involved.

If in doubt, I would err on the side of caution. If the IRS finds income that you did not report it could cost you not only penalties but the hassle, time, and legal expense of future audits. As well as lost sleep.

Mary

Hello all! I just signed up and was curious about some issues.

Can any other avatars/personalities in SL ever find out your real life name and/or email address, and/or other details about you in real life?

Also, what implications if at all can your SL actions have in RL? ex. I see escort services being advertised, is that legal to solicit and/or pay for it? Can that have any impact on you in real life or is it completely seperate and cannot be tied into your RL personality?
Thanks!