Cashout Fees To Rise to 5%

[Alyona Su]

57 minutes ago, Theresa Tennyson said:

I'm referring to how the merchant should think of it, as opposed to Bliss's statement that it's a "very different financial reality." You are right that they have no control over what Linden Lab does, any more than any other businessperson would have control over what their customers and suppliers do outside of actual contracts.

Okay, that makes sense, then.

56 minutes ago, Mollymews said:

 L$ are classified as Convertible Virtual Currency by the US Treasury

the US Internal Revenue Service determines that a person earning real money making and selling stuff, or providing a service, as self-employed when that person is trading on their own account, and as such that person is eligible to claim business expenses

it is the IRS that decides who/what is business, not LL, not Apple, not Amazon, not Youtube, nor any other online platform

I'll dig up my source and you dig up yours and we can see which is newer and therefore, voids the older.

According to the Internal Revenue Service (who dictates everything to the U.S. Treasury) - Virtual Currencies are this that are used directly in lieu of legal-tender, such as BitCoin, etc. As search throughout IRS.gov returns zero results for "Convertable Virtual Currency". The same is true at U.S. Treasury.gov; their only reference to virtual currencies, again, refer to BitCoin and others used in lieu of legal tender for tangible goods and services and in both cases (I.R.S. and U.S. Treasury) the information provided is for information about fraud and money-laundering.

MY sources:

SL TOS:

Quote

"5.1 Each Linden dollar is a virtual token representing contractual permission from Linden Lab to access features of the Service. Linden dollars are available for Purchase or distribution at Linden Lab’s discretion, and are not redeemable for monetary value from Linden Lab."

The U.S. Treasury Financial Crimes Center Document (PDF): http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

Wikipedia "Economy of Second Life":

Quote

"The virtual world Second Life has its own economy and a virtual token referred to as Linden Dollars (L$). In the SL economy, users (called "residents") buy from and sell to one another directly, using the Linden, which is a closed-loop virtual token for use only within the Second Life platform." https://en.wikipedia.org/wiki/Economy_of_Second_Life

 

I.R.S. Official statement of official guidance of Virtual Currency:

Quote

 

"The Internal Revenue Service has issued guidance (PDF) on the tax treatment of transactions using virtual currencies, such as Bitcoins or other similar currencies.

"The sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liability. This guidance applies to individuals and businesses that use virtual currencies." https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies

 

Shall I go on? Linden Dollar is every bit as valuable as Monopoly Money.

 

[Love Zhaoying]

4 minutes ago, Alyona Su said:

Linden Dollar is every bit as valuable as Monopoly Money

But is it fungible?

[Luna Bliss]

5 hours ago, Theresa Tennyson said:

IF a Second Life business is the primary source of the owner's real-life income

THEN it is a real-life business.

 

 

1 hour ago, Theresa Tennyson said:

 Bliss's statement that it's a "very different financial reality."

I never said a SL business is not a RL business when one is earning real money here when I expressed that SL operates under a "very different financial reality" as opposed to a business outside of SL. I've paid way too many taxes to believe such a silly notion.
What I'm trying to say is that are numerous differences (some were discussed recently) between SL (or all digital businesses for that matter) & RL businesses, and so one can't accurately apply many of the factors in RL businesses to a SL business.
It's apples to oranges with so many comparisons.
For example, someone suggested we should have the same profit margins of 1% as RL retailers do.
Someone suggested we can easily raise prices to make up for an increase in cashout fees (but there's a perception of 'pixels' not being worth as much as RL items, however, and so in virtual worlds we have trouble justifying the worth of our endeavors).
There's many more differences...basically digital content goes by a different set of rules.

[Luna Bliss]

16 hours ago, Mollymews said:

20 hours ago, Luna Bliss said:

Why do you feel a need to place one above or below the other?

another good question

when it comes to material things we all have our own set of relative values.

I actually share some of your proclivities as I don't like clutter in my home either.
However, I'm not sure why your main entry into this thread is to label content "stuff" and basically minimize its importance, knowing (if you read this thread) that merchants are worried about their income.
It's just one more attack, is how it feels to me, although I do understand your position more than other criticizers and see that it doesn't seem to come from jealousy over not being able to earn money as so many of these attacks seem to be motivated by. You like what you like -- no argument in that.

One thing to keep in mind though since you championed the creativity of others who produce plays, provide music, and the like (as well you should, as their efforts are vital to the existence of SL) is that many of these creatives fund their existence in SL and their other projects through selling this "stuff".

Didn't you post on another thread that you thought all content should be free? I don't think you realize the hard work that goes into selling here. Merchants that do manage to earn significant money often work 12 hours a day, 7 days a week -- Why should they expend this much effort without any compensation?

But anyway... these attacks on this thread...there's those who have expressed merchants are basically snobs and too full of themselves, those who feel inspired by telling merchants they are replaceable, those who feel merchants make too much money because they have too high a profit margin unlike businesses outside SL, those who accuse merchants of not caring about other creatives in SL (such as musicians), and more..

I can totally understand someone weighing out the sides and believing a fee increase is justified, but this is not what happened on this thread.
I don't believe there is even one person on this thread praising the effort of merchants, or even expressing some sympathy regarding how this fee increase will be difficult for them, although I hear these sentiments a lot inworld.
For the life of me, I can't understand how merchants have so little support on this thread, and in some other threads as well.
I think I'm going back to my virtual forest where my efforts are more appreciated -- the attitude there is very different from the one on this forum.

[Polenth Yue]

My main issue isn't that the prices went up. It's that they held off changing prices for as long as possible, so when it happened, it all happened in one hit. Everything went up by the full amount needed. Small increases over the years would have made it easier for people to budget.

I don't make a living in Second Life, but it does usually pay for itself. My budget doesn't have enough space for sudden price changes at this scale, so whether I'll earn enough to pay for my premium account this year is going to be hit or miss. Which then impacts others, because I'm going to have to be more frugal about spending any money until I know I have enough for my account.

[Mollymews]

8 hours ago, Alyona Su said:

I'll dig up my source and you dig up yours and we can see which is newer and therefore, voids the older

 

the latest is here: https://www.fincen.gov/sites/default/files/2019-05/FinCEN Guidance CVC FINAL 508.pdf

the fewest number of words to explain this is what Love asked: "But is it fungible?"

the answer to this is yes. For US FinCEN purposes L$ can be converted to USD

it is for this reason that LL most probably stopped 3rd-party providers trading L$ with LL. The stopping had little to do with L$ in itself, and everything to do with the real world identities of the account holders on the 3rd-party trading platforms. Within the FinCEN regulations is a thing called 'chain of trust' Where a company like LL has to assert that LL trusts the 3rd-party entities to know who their customers are. Like LL has to assert that they trust PayPal, Skrill and the credit card companies to know the real world identities of their customers. And those companies in turn have to assert that this is true

having closed off the 3rd-party L$ trading platforms, then from LL's perspective the L$ is now a closed system, confined to the LL platform

it is here that we now get to what you are mentioning

that the L$ is now in an online closed system doesn't change its FinCEN classification as a CVC - convertible virtual currency - because it still is convertible to USD

what the closed system does tho is provide income tax compliance relief for LL's customers - SL residents. The US IRS currently determines that CVC-denominated trades wholely within an online closed system are not income taxable - that only when converted to USD, the USD value is income taxable. This determination may change in the future. Various US Congress members do raise it from time to time

about LL saying in the ToS about how they see L$. That's mostly about what happens should LL ever close down SL. When we sign in to SL we accept that LL will not itself recompense us the USD value of our L$ balance. Even tho the L$ is a CVC by FinCEN definition. We can tho line up as ordinary creditors for any USD, that LL may be holding for us

i will say that I am not a forensic accountant. I do tho read my way thru all this stuff, and thru papers and FAQ published by RL accountancy firms, because this stuff is interesting to me. And when this kind of stuff does impact my own income then I get advice from my own accountant

so take everything I say here with appropriate caution, and anyone reading should consult their own accountant when its their money at stake 

[Alyona Su]

12 hours ago, Mollymews said:

he answer to this is yes. For US FinCEN purposes L$ can be converted to USD

You spin, ma'am.

1. L$, Linden Dollars, Lindens, Linden is not mentioned anywhere in the document.
2. This is not the U.S. Treasury, it is the Financial Crimes Center, a specific division of U.S. Treasury.
3. The document specifically and explicitly targets illegal activity.
4. The document clearly defines "ability to purchase tangible goods or service" [paraphrased] throughout.

You may be referring to this section:

Quote

1.3. Convertible Virtual Currency (CVC) The term “virtual currency” refers to a medium of exchange that can operate like currency but does not have all the attributes of “real” currency, as defined in 31 CFR § 1010.100(m), including legal tender status.15 15. 2013 VC Guidance, at 1; see also, inpra, section 3. CVC is a type of virtual currency that either has an equivalent value as currency, or acts as a substitute for currency, and is therefore a type of “value that substitutes for currency.” As mentioned above, the label applied to any particular type of CVC (such as “digital currency,” “cryptocurrency,” “cryptoasset,” “digital asset,” etc.) is not dispositive of its regulatory treatment under the BSA. Similarly, as money transmission involves the acceptance and transmission of value that substitutes for currency by any means, transactions denominated in CVC will be subject to FinCEN regulations regardless of whether the CVC is represented by a physical or digital token, whether the type of ledger used to record the transactions is centralized or distributed, or the type of technology utilized for the transmission of value.

Which does not apply to L$ because L$ is purchased and sold to *other users* and not Linden Lab. It cannot be used to purchase tangible goods or services. It is a closed-loop currency; monopoly money where the one and only use and value is to other Second Life users.

But if you insist, then fine. In that case: are you reporting your income to your tax authorities?

[Da5id Weatherwax]

As somebody who has had a day job where FinCEN compliance and AML procedures were part of it, you should be aware that there's a gap between the "letter of the law" and "what a company is prepared to risk."

I was employed by a major American bank and senior enough that I was considered an "officer of the company", albeit on the lowest level of that particular totem pole, which meant that to a limited extent "my actions were the companies actions" and could therefore expose the company, not just me, to liability if I screwed up (which is why I'm not naming the bank - even though I no longer work there - because I am in no way speaking for them or expressing a corporate position relevant to the time when I was there). Thank Cthullhu, I was not managing or handling the money directly, but I was writing the requirements for the software the bank used to make critical decisions that directly impacted their customers lives and their compliance with those regulations.

When rules and regulations are written by lawyers and politicians, when they are interpreted into corporate policy by bankers and accountants who speak a "different professional language" from the folks who wrote the rules and that mare's nest then has to turn into hard math and logic that programmers can write code to, and it's your job to do that, you get a pretty good feel for how extremely bed-wettingly nervous corporate execs get about running afoul of those rules. If they can come up with some fever-dream-inspired convoluted chain of logic that says "if you do this they might be able to call you out as non-compliant" - even if it has little basis in fact or what the law actually is - they'll instruct their company to not do that. The penalties are ugly.

We can quibble all we want about whether the $L is actually a "virtual currency" under the regs or not, but if execs at LL think it might be, they'll formulate corporate policy as if that were a settled question and it is.

[Alyona Su]

1 hour ago, Da5id Weatherwax said:

We can quibble all we want about whether the $L is actually a "virtual currency" under the regs or not, but if execs at LL think it might be, they'll formulate corporate policy as if that were a settled question and it is.

Precisely. Thank you. LOL

My daytime profession is communications, so I know exactly what you're talking about regarding corporate paranoia. I get the be like the Human resources department regarding outside-facing stuffs all the time.

[Da5id Weatherwax]

4 hours ago, Alyona Su said:

In that case: are you reporting your income to your tax authorities?

I know you were addressing somebody else, but for my case, yes. Every cent of USD cashed out from SL and converted to my local currency is reported as income from self-employment, offset against everything I spend to maintain my SL existence, any piece of gear or software I need to pay for to earn that cash, as a business expense. Even the cash that never hits "my account", either in Paypal or my bank, but is just paid straight back to LL from my "USD balance" is accounted for - the same number goes in as income and business expense, so for most tax purposes it's a wash but it's reported anyway because fixing it after the fact is a lot more expensive that just giving real numbers and paying my legit dues up front

[Alyona Su]

2 hours ago, Da5id Weatherwax said:

Every cent of USD cashed out from SL and converted to my local currency is reported as income

Then I salute you, sir. I really do. Though that places you into the 1%, a different "1%" perhaps, but still a 1%

[Da5id Weatherwax]

42 minutes ago, Alyona Su said:

Then I salute you, sir. I really do. Though that places you into the 1%, a different "1%" perhaps, but still a 1%

It's pure pragmatism, I assure you!  These are all electronic transactions. HMRC or the IRS or whatever local equivalent can trace them in seconds if they want to, so why try and fool them when I know that all they need to do is look and I'm busted? Sure, the numbers are small and they will likely not insist on any truly horrible penalty but it will still end up being more than I'd pay if I was honest up front. Besides, my mother taught me to be honest and even ancient as she is I've no wish to discover that even with my own advanced years I'm not too old to get clipped around the ear.

[Blush Bravin]

4 hours ago, Da5id Weatherwax said:

my mother taught me to be honest and even ancient as she is I've no wish to discover that even with my own advanced years I'm not too old to get clipped around the ear.

Gotta love your mom .. she did a good job!

[Mollymews]

9 hours ago, Da5id Weatherwax said:

We can quibble all we want about whether the $L is actually a "virtual currency" under the regs or not, but if execs at LL think it might be, they'll formulate corporate policy as if that were a settled question and it is.

yes this

[Mollymews]

12 hours ago, Alyona Su said:

 are you reporting your income to your tax authorities?

yes I do. I believe that my country (NZ) should provide healthcare, education and social services to all people when they need it, not if/or they can pay for it individually at the moment they need it. And I act on that belief and pay my taxes as this has to be funded. As a country together we do this

[Marina Ramer]

A very important petition regarding this present topic, please read it and share it on your social media if you agree?
http://chng.it/tCsjBk2y2B

[Blush Bravin]

2 hours ago, Marina Ramer said:

A very important petition regarding this present topic, please read it and share it on your social media if you agree?
http://chng.it/tCsjBk2y2B

Your petition also misrepresents those like me, who are creators, who understand Linden Lab's reason for the increase. I very much resent how you end the letter signing it your residents. You are NOT representing everyone. 

[Rya Nitely]

 

 

37 minutes ago, Blush Bravin said:

...who understand Linden Lab's reason for the increase.

And, in some small way, do you also understand the concerns of creators who depend on every cent of their SL income,  and who feel they deserve it for their efforts? 🙂

[Blush Bravin]

53 minutes ago, Rya Nitely said:

 

 

And, in some small way, do you also understand the concerns of creators who depend on every cent of their SL income,  and who feel they deserve it for their efforts? 🙂

I completely understand and have no issue with anyone speaking up to present their case. I don't think it's appropriate for someone to start a petition that is worded in such a way to make it sound as though all merchants have the same opinion. I would have no issue with the person or group who wrote that petition signing their names to it and then inviting others to add their names at the bottom. That is the way petitions work. 

[Chic Aeon]

I honestly doubt that petition will have much effect on The Lab's position -- especially since many of the folks signing it are apparently not creators and don't cash out.  That being said ---- 

 

Each of us ALWAYS has a choice to stay or go. We always have. When we signed our first TOS it was made crystal clear that Second Life was Linden Lab's platform. They make the rules. We can accept them or we can leave. Personally $2.50 per hundred dollars isn't much money. I can't really imagine folks exiting the platform because they are losing that little bit. 

Are the upset? Insulted? Mad?  Certainly some are, but I can't really see that it is actually about that $2.50.  There have been quite a few exoduses in Second Life's long history. All the ones that I can remember were more about principle than money.  It is certainly each person's right to have a point of view and make the point of view known, but as Blush said there are plenty of folks that are OK with the small increase and lumping everyone together? It is simply a lie.  The petition should have read something more like "the people signing this petition" etc.  

 

Now should LL decide to boost the Marketplace fee a ton -- I would likely react.  I definitely reacted when something similar happened in Sansar, but there is a big difference between 2.5 percent and 37 percent (varies with how folks did their math). 

[Mollymews]

On 6/13/2019 at 3:45 AM, Luna Bliss said:

Didn't you post on another thread that you thought all content should be free?

I don't think you realize the hard work that goes into selling here. Merchants that do manage to earn significant money often work 12 hours a day, 7 days a week -- Why should they expend this much effort without any compensation?

Two parts to this

the first part. I never said all content should be free.  It was a posited answer to a posited question: Where might SL be today in terms of user numbers if nobody was able to cash out. Not stop cashing out now, but had cash outs never been enabled ?  To begin to answer this then by a real world measure look at Minecraft

Second part. Do I realize?  Yes I do.  I have said that I can admire the crafting work that goes into a piece. As the customer my tangible appreciation for a piece of work is the money I pay when I buy it. I have also said previously that I will not be deterred from buying stuff that I like and want in SL, should creatives and merchants put up their L$ prices to cover their costs

 

[Rya Nitely]

Second life is a very different thing to Minecraft. There are many reasons why people join and stay in SL. I don't think many people joined for the purpose of putting boxes together. 

 

[Rya Nitely]

2 hours ago, Blush Bravin said:

I completely understand....

Thank you, it's good to see things from others' perspective.

[Mollymews]

26 minutes ago, Rya Nitely said:

Second life is a very different thing to Minecraft. There are many reasons why people join and stay in SL. I don't think many people joined for the purpose of putting boxes together. 

 

people did join SL in 2003/2004 to put boxes together. And texture them. And chuck them at each other. And chat. That's all there was to do

[Elvina Ewing]

8 hours ago, Marina Ramer said:

A very important petition regarding this present topic, please read it and share it on your social media if you agree?
http://chng.it/tCsjBk2y2B

thank you for the petition link! I signed. Maybe you should post it in a separate thread and on General forum too. It is heartwarming to see that nearly 3000 people have signed it already. Merchants who read this forum only might feel very disheartened by the response of the LL Cheerleading Team, now they will see that they are not alone.