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Hello all!

 I am hearing about Linden Labs completing a new TOS due to some kind of new money laundering laws being passed in the US. The requirements to buy Lindens will be to send Linden Labs a photo I.D to prove it you. This sounds like a scam..has anyone heard??

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here is the blog post with the details, and the forums have lots of discussion around this change. I will say that you heard incorrectly though. the ID requirement is only for those who wish to take actual money out of Second Life, changing Linden Dollars back into US dollars for example. You will not need to provide an ID to buy linden dollars. 

 

Edited by seanabrady
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52 minutes ago, Cordalynn said:

Hello all!

Hi

53 minutes ago, Cordalynn said:

Hello all!

 The requirements to buy  sell Lindens will be to send Linden Labs a photo I.D to prove it you.

Courteous FIFY.

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It applies to exchanging lindens to real money through the exchange, which is a requirement of law.

LL is required to comply like other companies to the laws since it is a US based company, and money exchange applies to anyone, regardless of country who wis hto cash out. 

US residents who make money on SL over a certain amount will also be issued tax documents. 

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28 minutes ago, anthonytorino said:

It applies to exchanging lindens to real money through the exchange, which is a requirement of law.

I believe you may be mistaken (or just that your mind is on one thing and finger typing another - happens to me too) :) 

The law is when money is transferred to your ownership, that only happens when you do a "cash-out" - not with the LINDEX Exchange. When you sell Linden Dollars for U.S. Dollars on the L$ Exchange, those U.S. Dollars aren't really yours, yet. Rather they are simply a credit on your account and can only be spent with Linden Lab to cover any moneys owed to Linden Lab. All monetary handling and changing up to this point does *not* require legal personal information or requires that your are "registered" with the system. It all will continue working as it always did.

However, if you claim the credit (transfer it from Linden Lab into your PayPal account) then Linden Lab is *paying you* and therefore must have that legal information because they are required by law to send that information to the taxing authorities. Because you are required to pay tax on that *new income*.

In short, if you never "cash-out" then you've never owned any of that money; no need to provide RL information (other than what you already have just to sign-up for SL.)

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On 8/20/2019 at 11:23 AM, Alyona Su said:

I believe you may be mistaken (or just that your mind is on one thing and finger typing another - happens to me too) :) 

The law is when money is transferred to your ownership, that only happens when you do a "cash-out" - not with the LINDEX Exchange. When you sell Linden Dollars for U.S. Dollars on the L$ Exchange, those U.S. Dollars aren't really yours, yet. Rather they are simply a credit on your account and can only be spent with Linden Lab to cover any moneys owed to Linden Lab. All monetary handling and changing up to this point does *not* require legal personal information or requires that your are "registered" with the system. It all will continue working as it always did.

However, if you claim the credit (transfer it from Linden Lab into your PayPal account) then Linden Lab is *paying you* and therefore must have that legal information because they are required by law to send that information to the taxing authorities. Because you are required to pay tax on that *new income*.

In short, if you never "cash-out" then you've never owned any of that money; no need to provide RL information (other than what you already have just to sign-up for SL.)

That's what I stated. Any virtual money exchanged for real currency is subject to federal and state laws. 

The new Tilia front is for those transfering fund credit to an outside financial group, including paypal, a bank account ect. 

Any virtual funds cashed out and placed in the Tilia (Third Party) exchange  subject to fees by tilia, even if not yet transferred, should the use drop and become inactive.. 

I used to earn a significant amounts in SL, and during one period, after making so much, was required to report it. Cashing out was easier then, but now it is directly reported monthly rather then at the end of a year. The difference is it was for non-profit community support so we had to then file a secondary exempt form with all financial transfer records to the charity. (Applies to cashout to external accounts). 

be sure to check close with the fees once money is transferred to lindex, the moment you request it, there are fees.

Conversion to Real USD, including account credit is still USD, but internal. As long as it can not be transferred to another account (External), it is ok. THe moment they allow it, ID is required. 

The IRS is interested in profit for tax reasons.. Even tho transfering to personal bank accounts is what the IRS will look for. 

Things they Do report and check. Large amounts of linden, transferred to another account that is then cashed out. In somes over 1000.00 USD worth, they record it. There have been cases the FBI has actually tracked such exchanges on Secondlife and other virtual worlds. 

The tax documentation is a requirement via the IRS and as explained in Linden Lab’s original blog post, will be sent when people reach certain transaction thresholds via processing credit and sales on the LindeX. Linden Lab are required to file a 1099K for US residents who make more than 200 transactions and those transactions in total are above USD$20,000.

Most will not reach the 20,000. 

 

 

 

 

Edited by anthonytorino
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6 minutes ago, anthonytorino said:

That's what I stated. Any virtual money exchanged for real currency is subject to federal and state laws. 

The new Lindex front is for those transfering fund credit to an outside financial group, including paypal, a bank account ect. 

Any virtual funds cashed out and placed in the Lindex exchange are subject to fees, even if not yet transferred. 

I used to earn a significant profit in SL, and during one period, after making so much, was required to report it. Cashing out was easier then, but now it is directly reported monthly rather then at the end of a year.

be sure to check close with the fees once money is transferred to lindex, the moment you request it, you're required to provide identification. Convertion to Real USB, including account credit is still USD. Even tho transfering to personal bank accounts is what the IRS will look for.

The tax documentation is a requirement via the IRS and as explained in Linden Lab’s original blog post, will be sent when people reach certain transaction thresholds via processing credit and sales on the LindeX. Linden Lab are required to file a 1099K for US residents who make more than 200 transactions and those transactions in total are above USD$20,000.

Most will not reach the 20,000.

 

 

 

To you both :D.  Just wanted to note that while LL originally assured us we would not be dealing with Tilia UNLESS we transferred money out to Paypal, that changed somewhere along the way and there has been at least one report on another thread of someone converting lindens to a USD balance simply to pay tier who was allowed to do that "the first time" and then was told by support that they would have to give all the "transfer to Paypal" personal info THE NEXT TIME that they converted lindens to a USD balance if they wanted to repeat that process.

 

This appeared to be someone with a lot of land and tier so it "might" be that they hit a reporting threshold that no one bothered to tell us about --- assuming that it wouldn't matter to that many folks perhaps.    

 

So it IS very confusing since -- as with many things about Tilia --- information and rules changed during July 1 and August 2.  Perhaps someone who has successfully turned in lindens for a USD (without processing to Paypal) might be able to confirm or deny that the personal info for ONLY converting to USD  is mandatory.  

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30 minutes ago, anthonytorino said:

That's what I stated. Any virtual money exchanged for real currency is subject to federal and state laws.

You are mistaken. It becomes taxable only after it is removed from Linden Lab's control. It is not subject to taxation while it is still only a a credit in your account. Taxation only applies when you receive the money into your own bank account (including PayPal which is often linked to a bank account). Until then, it is not subject to taxation and, therefore, "registration" with Tilia is not a requirement, even if you sell L$ for U.S. $.

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6 hours ago, Alyona Su said:

You are mistaken. It becomes taxable only after it is removed from Linden Lab's control. It is not subject to taxation while it is still only a a credit in your account. Taxation only applies when you receive the money into your own bank account (including PayPal which is often linked to a bank account). Until then, it is not subject to taxation and, therefore, "registration" with Tilia is not a requirement, even if you sell L$ for U.S. $.

Give the government enough time and they'll tax it the minute it becomes USD

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9 hours ago, LittleMe Jewell said:

Give the government enough time and they'll tax it the minute it becomes USD

Hush! Do not give them ideas! And keeping the thread going because to annoy @CoffeeDujour ! (~hugs Coffee~) . :)

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18 hours ago, Alyona Su said:

You are mistaken. It becomes taxable only after it is removed from Linden Lab's control. It is not subject to taxation while it is still only a a credit in your account. Taxation only applies when you receive the money into your own bank account (including PayPal which is often linked to a bank account). Until then, it is not subject to taxation and, therefore, "registration" with Tilia is not a requirement, even if you sell L$ for U.S. $.

You need to read a bit further into. 

This is a good resource. https://www.taxlitigator.com/virtual-currency-constitutes-taxable-property-for-u-s-federal-tax-purposes/

Edited by anthonytorino

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1 hour ago, anthonytorino said:

I'm not trying to change your mind or edify you. I am explaining for the benefit of all other readers (so they are not misinformed) that they can go ahead and sell their L$ for $U.S. with no worries and without having to "register" with Tilia. Many people do this for paying their Linden Lab bills (I do it when my Premium account is due and used to do it to pay my Private Region bills.) So you can debunk me all you want. The fact is people's "taxable" information (registering with the Tilia site) is not required until they take the credit out of SL/LL by cashing-out (transfer the money *out of* Second Life/Linden Lab into their PayPal/Bank.)

~shrugs~

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35 minutes ago, Alyona Su said:

I'm not trying to change your mind or edify you. I am explaining for the benefit of all other readers (so they are not misinformed) that they can go ahead and sell their L$ for $U.S. with no worries and without having to "register" with Tilia. Many people do this for paying their Linden Lab bills (I do it when my Premium account is due and used to do it to pay my Private Region bills.) So you can debunk me all you want. The fact is people's "taxable" information (registering with the Tilia site) is not required until they take the credit out of SL/LL by cashing-out (transfer the money *out of* Second Life/Linden Lab into their PayPal/Bank.)

~shrugs~

You are trying to justify yourself without any need. I Deal with such things in real life, there is nothing you can tell me when it comes to tax codes, so be clear of that. 

When you use tilia, and covert to a US dollar, there are fees associated. If the account becomes unused, there are in FACT fees associated. Saying there isn't is 100% in fact wrong. back to active status. Tilia aspects are not owned by Linden labs when currency is exchanged. It is third party.

It is outlined by linden labs. It is outlined in the agreement when you use Tilia. I recommend you read it completely. I know because I did an exchange on our 1 account through my partner, which we moved it off since he won't use it for exchange, and only mine. With the zero balance now, we received an email specifying about the fees if left with a zero balance for 12 months (the original contract specifies any fees left in 12 months or longer, but now inactivity means regardless of funds and the accoutn is not used for 12 months (has to be closed).  on the tilia side, it is a contract. Yes you can use it for paying your monthly tier on a server contract. The tilia aspect is different then before. Tilia is a third party service. 

Even if one aspect is non-profit. To move it to the charities external account there is a fee. Our external does not charge a fee because it is non-profit status, The identification registered with Tilia is the non profits, with 2 additional ID's of those authorized as agents. . 

Tilia is the provider for virtual tokens and USD storage of exchange funds for linden labs. 

They have changed the maintenance fee with the deal with LL. Which is good news.

Inactivity was changed to a whole year rather the the old 3 and 6 month one.

Internal $L, or balance to pay tiers are not affected by fees unless exchanged for US currency.. 

---------------------------------------

Tilia may offer an “In-Platform Exchange” through which Platform users may purchase Virtual Tokens or exchange Virtual Tokens for a credit to their Stored Value Balance (as defined in Section 3.3.1 below) in accordance with these Terms. Internal $L, or blance to pay tiers are not affected by fees unless exchanged for US currency.. 

--------------------------------------------

"If you have funds in your Stored Value Balance and have not made any transfers to or from or otherwise accessed your Stored Value Balance for a period of twelve (12) months, your Stored Value Balance will be deemed an “Inactive Account.”  Other forms of access besides a transfer include, for example, a balance inquiry or accessing your Account.  Unless prohibited by applicable law, we reserve the right to deduct from any Stored Value Balance that is an Inactive Account a fee in the amount of the lower of (i) the amount set forth in our Fee Schedule or (ii) the balance of funds in the Inactive Account (the “Inactivity Fee”). The Inactivity Fee will be charged each successive month for as long as the Stored Value Balance is an Inactive Account." 

 

We will deduct an Inactivity Fee from your Stored Value Balance each month until one of the following events occurs:

  1. you make a transfer of funds into or out of, or otherwise access, your Stored Value Balance, such that it is no longer an Inactive Account; or
  2. the balance of your Inactive Account reaches zero; or
  3. you process a credit from your Stored Value Balance to a permitted account as described in Section 3.3.3 above.

----------------------------

Be sure to have funds of some sort if not using it for a long period, or close the account if you are nto goign to possibly log in for 12 months or longer.  

 

 

 

 

 

Edited by anthonytorino

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1 hour ago, anthonytorino said:

It is outlined by linden labs. It is outlined in the agreement when you use Tilia. I recommend you read it completely. I know because I did an exchange on our 1 account through my partner, which we moved it off since he won't use it for exchange, and only mine. With the zero balance now, we received an email specifying about the fees if left with a zero balance for 12 months (the original contract specifies any fees left in 12 months or longer, but now inactivity means regardless of funds and the accoutn is not used for 12 months (has to be closed).  on the tilia side, it is a contract. Yes you can use it for paying your monthly tier on a server contract. The tilia aspect is different then before. Tilia is a third party service. 

I'm not totally sure I understand what you are trying to say, so these comments may be moot, but LL did clarify a few things around this:

1) Just accessing your dashboard to see your USD balance is considered 'account activity' and thus will prevent an 'inactivity fee' being charged.

2) Paying any tier or membership charges with a USD balance or buying L$ with a USD balance is considered 'account activity' and thus will prevent an 'inactivity fee' being charged. 

3) Until such time as you actually request to Process Credit, you should not have to provide any identifying documents to LL.

4) The money does not become taxable in the US until it is actually transferred out of your USD balance to PayPal or other external site.
    This part is a grey area in that some views would consider the money taxable as soon as you convert to USD, but that part isn't actually enforced - probably because of the varying interpretations of the legalese itself.

Edited by LittleMe Jewell
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11 minutes ago, LittleMe Jewell said:

4) The money does not become taxable in the US until it is actually transferred out of your USD balance to PayPal or other external site.
    This part is a grey area in that some views would consider the money taxable as soon as you convert to USD, but that part isn't actually enforced - probably because of the varying interpretations of the legalese itself.

My CPA says it's taxable the second it becomes USD, but these accountants do battle it out on many issues.

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My CPA says only what is taken out of my account is considered my taxable income. So, basically whatever I put in my business PayPal. 

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1 minute ago, Pamela Galli said:

My CPA says only what is taken out of my account is considered my taxable income. So, basically whatever I put in my business PayPal. 

If that were true I sure could have ended up with a lot more money, say if I'd never transferred to Paypal until future times when my tax rate might have been lower.....those taxes are BAD when you have to add 15% on top of whatever your bracket already is for Social Security as a self-employed worker (since working for a company they pay half).

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1 minute ago, Luna Bliss said:

If that were true I sure could have ended up with a lot more money, say if I'd never transferred to Paypal until future times when my tax rate might have been lower.....those taxes are BAD when you have to add 15% on top of whatever your bracket already is for Social Security as a self-employed worker (since working for a company they pay half).

Don't transfer more then 20,000 in a given year and you won't be issued a reportable 1099

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1 minute ago, anthonytorino said:

Don't transfer more then 20,000 in a given year and you won't be issued a reportable 1099

I don't know about the 1099 requirements, but all earnings must be reported for tax purposes now -- even hobby income.

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42 minutes ago, LittleMe Jewell said:

I'm not totally sure I understand what you are trying to say, so these comments may be moot, but LL did clarify a few things around this:

1) Just accessing your dashboard to see your USD balance is considered 'account activity' and thus will prevent an 'inactivity fee' being charged.

2) Paying any tier or membership charges with a USD balance or buying L$ with a USD balance is considered 'account activity' and thus will prevent an 'inactivity fee' being charged. 

3) Until such time as you actually request to Process Credit, you should not have to provide any identifying documents to LL.

4) The money does not become taxable in the US until it is actually transferred out of your USD balance to PayPal or other external site.
    This part is a grey area in that some views would consider the money taxable as soon as you convert to USD, but that part isn't actually enforced - probably because of the varying interpretations of the legalese itself.

The tilia section is a different from just accesign your tilia account. Tilia is not linden labs and is separated. 

If you are not processing the funds then you are not taxed , and if you remain under 20,000 USD processed you do not have to pay tax to the IRS. The catch however is combined income. If you are retired, use second life as a subsidized income, and stay under the required bracket you can actually avoid paying income tax. Most people on SL minus large vendors and land owners won't be in that bracket. THere is other factors involved. NEver transfer funds you use to pay LL services in a given year (total sims X total Tier and fees plus 10% should always remain. That is not taxable income and safe. 

THe IRS website explain more details were virtual payed funds for services can be affected in certain ways, right now it's not a factor of tilia. IRS wants as much as they can get which is ridiculous. However that is the law, regardless of what players due, and services due. Keep yourself protected. 

Anything stored in Tilia however has there own service agreement. Most will have an active account but there are times people get frustrated, leave SL, and forget. If that is the case set a reminder for 11 months for tilia involved funds.

The main aspect is money laundering. 

 

 

 

 

 

 

 

Edited by anthonytorino

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58 minutes ago, LittleMe Jewell said:

3) Until such time as you actually request to Process Credit, you should not have to provide any identifying documents to LL.

Again, we were TOLD THIS many times in July, but there have been reports here about people being required to submit "personal info" in order to change "their next conversion from lindens to USD balance" JUST so that they could pay there tier ---- no processing credit out to Paypal at all. 

[Editing to be more clear for folks that didn't read that post --- the person was allowed to process Lindens to USD the first time but was told that they would have to fill out the personal info form before processing lindens to USD balance in the future.   This DOES make some sense as we were also told that having a USD balance of any kind would make it so that we would have to agree to the Tilia TOS and US Privacy statement - for US folks).  It really can't be BOTH WAYS.  ]

 

So perhaps @Grumpity Linden or @Brent Linden    could explain what may be going on.

 

And to some comments made further down on this thread about taxable income ---- I would advise people still processing out dollars to do their own research.  Many of us claimed our SL income on our taxes for years BEFORE the new Tilia rules came into the picture.

Edited by Chic Aeon
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7 minutes ago, Chic Aeon said:

here have been reports

A report does not a policy make. I've just done two conversions, one yesterday morning and one on Saturday with no issues. I would say that unless Linden lab or a Linden employee states that the policy has officially changed, then these reports should be considered glitches in the system or otherwise just hearsay.

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