Second Life U.S. RL Taxes Drives Creator Out

Psyke Phaeton has an article up on the Lab’s new request for tax information. Since Psyke lives outside the USA (Australia) and is not a US citizen he does not have to pay US taxes. But, the US government forces Linden Lab to collect a 30% tax from foreign nationals making money in the USA. If the Lab cannot get RL tax information on an individual they cannot pay them and in some cases may have to close their SL account, which Psyke says happened to him.

@ BS's Bring a Friend & Stay Awhile - 2014 Music & Dance

@ BS’s Bring a Friend & Stay Awhile – 2014 Music & Dance

Psyke made the Psyke’s Defense Systems® HomeSecurity™ Orb. You can find it in the Market Place here. The web site is here.

Psyke lists these reasons for not wanting to pay taxes to the USA:

  • Support NSA spying and mass data collection?
  • Support US endless wars and invasions overseas?
  • Continual erosion of the US Constitution?
  • Endless US Government debt which drains wealth and assistance from its citizens?
  • and many other activities?

Those are good reasons for not wanting to support any government. So, to avoid paying taxes, Psyke has released the Orb and its code via Creative Commons licensing and dropped the market place price to L$0. You can read about his decision in his comments here: W8-BEN from LL is not just an ID/tax document. But a question about supporting the US Gov or not.

The change in licensing is announced here: HSOrb now Open Source. Psyke Phaeton acct terminated Aug 28th by LL.

The Lab has no choice in these matters. The IRS in America is out of control and becoming an arm of the Democrat Party. If you are only following mainstream media, you are missing out on the latest revelations coming out of the Congressional hearing into the IRS Targeting Scandal and probably believe it is all a political smoke by the far right. The evidence is mounting and we are beyond any honest doubt that people in charge at the IRS despised their Political opponents and used government agencies to target them. That numerous hard drives and only the ones with information Congress wanted crashed and the backups for those drives were lost strains credulity and stinks of cover up. This much circumstantial evidence in a murder trial would get one convicted.

Whatever your political interest and beliefs, allowing either party to use government agencies to target their opponents is a major problem and the first steps toward a dictatorship.

Whatever the case, we now have a free Security Orb… which is nice but also really sad.

PS Update: Be sure you read the comments. Even Psyke has commented, finding that there was a misunderstanding of tax laws.

15 thoughts on “Second Life U.S. RL Taxes Drives Creator Out

  1. First of all the 5 stated reasons for not filling out the W8-BEN really makes it hard to take this post seriously. Lets keep our tinfoil hats in the boxes, for a better case.

    That being said, I believe there’s some wrong being said here.
    The W8-BEN you fill out is basically just documentation that you’re NOT an American and that the US IRS shouldn’t treat you as such. As long as you’re living in a country that has a tax treaty you have the benefit of not having to pay tax in US.
    Psyke being from Australia – which DOES INDEED have a tax treaty.

    All he had to do was to fill out the form, and claim his tax-treaty benefit of having 0% withheld by the source country.

    I’m a content creator myself, making a living from SL. I also was required to fill out the W8-BEN, which I of course did – end of story. I’m not paying taxes to US, that was the whole point of filling it out.

    If you look it up, you’ll see it’s actually quite a lot of countries with these treaty’s…

    So is there a \news worthy story\ for a creator living in a country NOT being on this list? probably…

    – but Psyke’s story wasn’t it, sorry.

  2. Its sad this has happened. Content creators can make any choice they wish about their content. Now, I must object to the your conspiracy theory you tacked onto this news story. The IRS works for the government. It does not answer to any other group, or shadow organization. Both left and right use the IRS against each other in their gamesmanship. (Remember all the people who were intimated or rejected for appointment by the President over their tax returns?) Linden Labs operates inside the United States, therefore must pay taxes. Also, there is a very real threat that money can be laundered inside Second Life. The Mafia, Criminals, Terrorist… whatever group who wants to hide their money transfers can not be up to any good. One of the best methods for our criminal justice style to track down criminals is with \Follow the Money.\

    • It is not true that government agencies have always been used by the political parties against their opponents. The then IRS director refused Nixon’s directions to abuse authority. Until recently both parties made sure that government agencies were non-partisan in their operation as they never knew when they would be in the minority again. You need to brush up on your history.

  3. No comment about the NSA and IRS (Big Brother is watching). But I am shocked that Psyke is in SL since 2003. I wonder if they have to run this by the CEO when they suspend a beta member account. The Lab manages to piss of more and more Oldbies, lately by it’s new gaming policy. I see tons of \casinos\ closing and people leaving SL because of that. What does LL expect when they require people to pay huge amounts for rl lawyers and make the already overpriced sims significantly more expensive.
    Anyway, I was just wondering. With Philips HiFi being a decentralized open source world, will we actually become independend from draconian US-laws? I mean can we just open a casino hosted in a country where it is legal and pay taxes in the country that we actually live in? I really hope that is the case. The future of virtual worlds needs to be open, free and independend from single corporations or countries.

    • I doubt we can attribute all the onerous reporting to LL. That is something a growing central government is imposing.

      Will HyFy be free of all the reporting and taxes? I seriously doubt it. Philip is talking about running the secure and centralized monetary system. That give the governments a choke point they can control.

  4. Psyke’s own follow-up post in the SLU thread you reference might be of interest:

    “Well that is a little embarrassing isn’t it. It seems no tax would be collected from me as I will not be in the US. Too late to turn back now. Perhaps LL needs to be more clear about the consequences and less threatening? Those LL wiki entries need all these documents linked in them. Now to re-ponder everything.”

  5. This is as much a lack of good information from Linden Lab issue as it is a tax issue, I’m not even sure at this stage if Psyke has fell foul of IRS requirements or the far muddier, account requirements. Linden Lab use the same form for both purposes but only one applies to the IRS.

    The comply or die policy The Lab apply with these forms is very hostile, they also don’t provide a good explanation of why people are receiving these forms when it’s for account, rather than tax, purposes.

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  7. I was wrong. Article 12 of Aus-US tax treaty does mention taxes get paid to the US. However Arcticle 14 specifies when that happens. The short version is if I do not even enter the US I am not elligible for the Article 12 taxes. It does seem that some other countries tax treaties don’t get off so lightly and each non-US person needs to read there country’s-US tax treaty in full. Giving money the the US government is no longer a valid objection for me regarding filling in the form.—A-to-Z

  8. I must take issue with the side-crack in the earlier comment about the changes to gambling ….oh I’m sorry … ‘skill gaming’ policy.
    Since 2010 when I first discovered zyngo and then no-devil I have lost in excess of 30,000 USD to such gambling. Why? because I became addicted.
    Thats why I welcome the labs tightening of the rules on ‘skill gaming’ as it may help reduce some citizens taking advantage of the weakness of others and potentially ruining their lives.
    I don’t think offering machines at 60,000L per play is ‘just a bit of fun’ as one casino owner tried to tell me.

    • There are programs for people with addictions…

      I don’t like the idea that I am restricted because people can’t cope with their choices.

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