I’ve previously blogged about the confusion regarding Linden Lab’s requests to users regarding tax and account information. A big part of the confusion came from people being sent requests for information that they had never been previously asked for by Linden Lab and wondering what it was all about and what exactly they needed to do.
Yesterday Linden Lab posted an updated blog post about the issues, but more importantly that blog post includes links to two very useful FAQ’s:
Linden Lab Official:Required Tax Documentation FAQ
Linden Lab Official:Required Account Documentation FAQ
As you can see there are two links, this is because people can be asked for additional information for different reasons. 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.
If you’re not a US resident then LL are not required to file a 1099K on your behalf, but if you’re getting the tax documentation request it probably means you’ve crossed the US resident threshold and they require the documentation to explain why they didn’t file a 1099K on your behalf. They need to know you’re not a US resident.
One important point to note is that if you have several Second Life accounts, their combined activities are counted. There are more important points to note, merchants should familiarise themselves with these requirements as one day, you may need to provided information to Linden Lab.
Another important point to note is that the 1099K Linden Lab file is not the same one Paypal will file. There is going to be some double reporting, I’m not at all sure what people will have to do in these circumstances but I’m sure the IRS will be able to help.
Whilst looking into this issue I discovered this was a standard threshold on services such as Paypal and Steam too, so this is something that has been on the cards. The difference was that Paypal and Steam provided a lot more information on this matter, so it’s good to see Linden Lab providing a lot more information now.
The account requirement requests are different, even though they look pretty much the same. The tax requests come via the IRS. the account requests come via US law, which law this is, is not specified. However if you hit a certain transaction threshold, you will be asked for account information. This threshold is unspecified and may or may not be the same as the tax requirement threshold.
Now this is where people may get confused, even though the account requests are not for tax purposes, you will need to fill in the same style tax forms that people who complete the tax forms fill in. However in this case, these forms are not used for tax purposes, got it? However in addition to filling in those forms, if you’re asked for account information you also need to provide government issued photo ID, such as:
- Driver’s license
- Military ID card
- Passport
- Any other form of government-issued photo ID
If your ID does not contain your address, you have to provide documentation that contains your address, such as a utlitiy bill.
Now if you are sent a request for this information, you have 30 days to fill in the information or your account will be put on hold or suspended. The tax document says put on hold, the account documentation says suspended.
I’m sure people will have more questions about this when they are sent these requests, if that’s the case then you do this via your support ticket.
I’m sure people will have concerns, especially about the mysterious US law, but remember that these requirements are not being initiated from Linden Lab, it’s US law and requirements and LL have to comply. The FAQ’s are definitely in the better late than never category and hopefully help people understand why they are being sent these requests.