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Posted in: Epic Games, Fortnite, Games, Video Games | Tagged: irs, V-Bucks
New IRS Documents Show Issues With V-Bucks In Fortnite
The Freedom of Information Act has brought to light some new IRS documents about their look into the use of V-Bucks in Fortnite.
Article Summary
- IRS documents reveal a review of Fortnite's V-Bucks and tax implications under FOIA case 2021-01180.
- Initial IRS scrutiny likened V-Bucks to Bitcoin, but references were quietly removed from their site.
- IRS struggled with a hasty decision and failed to publicly address the V-Bucks categorization issue.
- Fortnite players won't have to report in-game V-Buck spending on taxes, despite earlier confusion.
New documents from the Internal Revenue Service have come out documenting the organization's look into the virtual currency of Fortnite. The documents were released as part of the Freedom of Information Act (FOIA), as an over 850-page document is available for the public to check out pertaining to FOIA case 2021-01180. The entire document goes over the IRS's stance on V-Bucusk as they're used in the game, and a few interesting facts can be found within.
The request was originally made to find out what happened with the organization's original look into the online currency and then why those references to it were removed from the IRS's website. According to documentation, the IRS originally classified it as a virtual currency that required reporting as it pertained to individuals receiving virtual earnings, liking it to other currencies such as Bitcoin. This raised several concerns and debates, eventually leading to the IRS removing references to V-Bucks from their website as it pertains to being a virtual currency. This was done without an announcement, leading some to believe the IRS quietly changed their policy on the matter.
As you delve deeper into the documents, it is revealed through emails and memos that the agency decided it acted too quickly and hastily put V-Bucks into this category, but it doesn't seem to indicate a reason why it was rushed. What's more, it also shows that the IRS attempted to create a public response but ultimately failed to do so as they apparently had issues crafting one. (It might be time for the IRS to hire a better media relations team and a PR firm to help with that one.) Ultimately, it shows the IRS as an agency seemed to be either ill-equipped or uninformed at the time to handle a proper investigation into the matter before rushing a decision to the public, which is a sentiment many have had over the past few years when it comes to them dealing with virtual currencies.
This is understandable as the marketplace has been rapidly expanding and changing in many ways over the past decade; it's probably become insane for investigators, auditors, and regulators to keep up with. The good news, if you're a Fortnite player, is that you don't have to report these fake internet dollars that mostly buy in-game skins on your taxes. The bad news is that some people probably already did, and it doesn't look like there's a system in place to get that income back. If you have the time, we highly encourage you to check out the document, as it covers more than just the V-Bucks issues and delves into a wide range of topics within the IRS.
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