The chairman of the Joint Economic Committee is asking the Internal Revenue Service to refrain from taxing online gamers.

Congressman Jim Saxton, R-N.J., issued a press release asking the agency to take it easy when it comes to taxing participants in Internet-based video games. Saxton said the “population” of such online communities -- including games such as Second Life or World of Warcraft -- could exceed 10 million people globally.

Saxton said that the staff of the Joint Economic Committee has already begun an examination of the public policy issues, ranging from taxes to intellectual property rights, related to the universe of transactions that occur within an online community. While such transactions include the sale of goods and services and take place entirely within virtual economies -- there is no real-world exchange -- a real-world value can often be assigned to such transactions.

Based on existing law, if an individual generates cash income in U.S. dollars from transactions in virtual economies, questions arise over whether a taxable event has occurred. Saxton said that the goal of the committee’s study will be to help lawmakers understand the issues involved and head off any “premature attempt to impose a tax on virtual economies.”

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