IRS Confirms Video Game Currencies Aren’t Virtual Currencies

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The United States tax agency has confirmed that currencies collected within video games are not subject to the same tax obligations as cryptocurrency assets. The IRS previously suggested to players of Fortnite and other popular games that their use of in-game currency may be deemed taxable events.



The confusion arose thanks to an entry on the IRS’s official website. In a section defining what is meant by a virtual currency, the agency mentions specifically that Fortnite’s V-bucks and Roblox’s Robux are considered virtual currencies.

A recent Bloomberg article shows a screenshot from the IRS’s previous definition of what a virtual currency is. It lists in-game currencies alongside the likes of cryptocurrency like Bitcoin and Ether. It even mentions non-blockchain systems, like the Directed Acyclic Graph (DAG), used in IOTA, for example.



As BeInCrypto has previously reported, the taxation treatment of digital assets causes potential issues for cryptocurrency users. Each time they make a purchase using their Bitcoin or any other cryptocurrency, they must report any appreciation or devaluation of the digital currency since the time of purchase.

This differs from purchases made with foreign currencies. A de minimis exemption means gains realized when making smaller purchases are not taxed.

Mentioned alongside such cryptocurrencies, it’s easy to see why some thought the agency intended taxing gamers in the same way it is going after cryptocurrency users.

The IRS has since removed the page from its website. The change came on Wednesday of this week. [CNN Business]

IRS Chief Counsel Michael Desmond stated yesterday at a conference that the inclusion of in-game currencies within the definition of virtual currencies had indeed been a mistake.

“It was corrected and that was done quickly — as soon as it was brought to our attention.”

Today, the agency released a statement on the matter:

“The IRS recognizes that the language on our page potentially caused concern for some taxpayers… Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.”


All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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A former professional gambler, Rick first found Bitcoin in 2013 whilst researching alternative payment methods to use at online casinos. After transitioning to writing full-time in 2016, he put a growing passion for Bitcoin to work for him. He has since written for a number of digital asset publications.

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