Linden Lab – Page 136

November 19, 2013

Linden Lab Blog To Clarify Tax Information Requirement

Having previously reported that Second Life merchants had been reporting they’d been sent forms related to tax information by Linden Lab, I’m pleased to see that Linden Lab have now issued a blog post regarding the situation. There are still some remaining questions regarding this, some Linden Lab may have the answers to and others the IRS will be the only people with the answers.

The post says:

“The Internal Revenue Service (IRS) requires Linden Lab to collect and retain Form W-9 (for U.S. residents) and Form W-8BEN (for non-U.S. residents) at certain transaction volumes. If you reach the transaction threshold and we do not have your completed and signed W-9 or W-8BEN on file, we are required to withhold funds from your account (at the current rate of 28% of your gross amounts received). Additionally, for U.S. residents with 200 or more transactions with a total amount in excess of $20,000 in a calendar year, we are required to file a Form 1099-K with the IRS reporting those transactions for that year.

If you are required to submit a W-9 or W-8BEN form to us, we will email you before the end of the year with instructions on how to do so. Please follow the instructions to complete and submit the required Form W-9 or W-8BEN within thirty (30) days of receipt. You will only need to complete this paperwork once unless your information changes from year-to-year. If you do not receive an email from Linden Lab, we do not need you to complete these forms.”

One would hope that there will be an accompanying knowledgebase article or wiki reference regarding this. As I stated in my previous post on the subject, the likes of Steam and Paypal have information regarding this on their websites.

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November 19, 2013

Why Don’t Amazon, Paypal or Linden Lab offer Virtual Currency Exchanges To Other Business?

One of the issues regarding Cloud Party is the inability to cash out. This is understandable as content creators are more likely to be tempted to engage if they can find financial reward. Cloud Party do allow you to pay for services such as island rentals using Cloud Party coins, so there is a degree of economic movement but it stays firmly within Cloud Party.

Kitely on the other hand allow people to list items on their marketplace with the option of a Paypal payment as well as Kitely credits. There’s no cashing out from Kitely but paypal payments are a way of a merchant getting cold hard cash. Again, like Cloud Party, the inworld currency can be used to pay for services.

However what people would really like to be able to do is to sell Cloud Party coins or Kitely credits in the same manner as Linden Dollars can be bought and sold. The beauty of this solution is that it adds an added level of consumer confidence, because when they make a purchase, they are doing so with an inworld currency, they aren’t handing over details to a stranger in a virtual land. That’s the beauty of the virtual currency.

Recent legislation in the USA has given platform providers the heebie jeebies about users selling virtual currencies, hence why they aren’t that widely available. However you would think that someone would seize the opportunity to tap into this market, be that Paypal, Amazon or even Linden Lab.

Now I’m sure plenty of companies would like the idea of selling virtual currencies to consumers, the part they aren’t so keen on is allowing users to sell that virtual currency. Linden Lab of course do this with the Lindex, so why can’t they expand this to offering a service to other companies?

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November 17, 2013

Linden Lab Issuing W9 Tax Information Requests To Some Customers

A thread over at SLUniverse brings to light the issue that Linden Lab have apparently started to issue W9 Tax Information requests to certain customers. The information is patchy but evidence of the form is posted there.

The purpose of this request does not seem to be visible anywhere on the Second Life website, but information regarding the law can be found on the Paypal Website :

“Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including PayPal, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal. PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year.”

Linden Lab must therefore fall into the category of being a payment processor for the purposes of this law and it seems they are now requesting the required information, but there’s confusion as to when a customer crosses the threshold to fall into this category for Linden Lab to issue the request. Some people are reporting that the threshold is much lower than the requirements stipulated by the IRS.

If this is true, Linden Lab would not be the first company to do this, back in 2011 ecommercebytes reported that payment providers were lowballing IRS thresholds for 1099-K Reporting. In response to a seller’s question asking why Amazon had thresholds as low as 50 transactions instead or the required 200 Amazon said:

“The IRS requires that Amazon aggregates sales of sellers with multiple accounts, each of which alone may not meet the reporting threshold. Under IRS rules, the only way to definitively know whether accounts are owned by the same seller is to ask for tax identity information. Thus, we are doing everything we can to meet IRS requirements while still asking the fewest sellers necessary for their tax identity. We have crafted our policy with the help of our tax advisors and the IRS.”

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November 14, 2013

UCCSL Issue Response To Linden Lab Regarding TOS Changes

Over on the official forums there’s a thread which details the response letter from the UCCSL to Linden Lab:

NEW MAIL FROM THE UCCSL TO LINDEN LAB OFFICE AND PETER GRAY

I’ll post the contents of the letter below the cut. The letter is addressed to Linden Lab Office and Peter Gray. Poor Peter Gray, he’s public relations but he shouldn’t be being named like this, he’s more like the negotiator to broker peace talks. I still see him carrying a briefcase, wearing shades, a suit and looking like a character straight out of Resevoir dogs … actually he could be Mr Gray, although Mr Grey works better for me!

The letter makes suggestions regarding the limits or lack of them, in the new TOS, suggests that licences should not be perpetual, asks for limits on sublicences for third parties and suggests that purposes of use need to be limited. The UCCSL are not jumping up and down regarding all aspects of the new TOS and they seem to be focussed on section 2.3.

I still think the root problem is Linden Lab wanting a Linden Lab TOS for all their products, the problematic sections largely arise from the old Desura TOS and as Second Life and Desura are now under the same umbrella TOS, Linden Lab are trying to fit the Second Life square peg into the Desura round hole, which obviously isn’t a sensible fit.

However Linden Lab have suggested that they are moving towards opening more windows of opportunity for content creators across their range of products and this is really what Linden Lab should be discussing, rather than getting sidetracked with trying to right the new TOS, they should be explaining why they need these terms to open those windows.

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November 11, 2013November 11, 2013

New Marketplace Merchants Will Need PIOF

Linden Lab have announced that those who want to open new stores on the Second Life Marketplace will be required to provide payment info on file (PIOF). The move has been warmly received by merchants, many of whom who seem to view it as a beefing up of security.

This will, once one or two teething issues and quirks are ironed out, undoubtedly reduce the amount of throwaway alts used to practice questionable behaviour on the marketplace. Obviously it won’t cut down on all questionable behaviour but it will greatly reduce it and we should see less of the most brazen scams taking place … one would hope!

The blog post states:

“Only newly created accounts will be required to meet this requirement at this time, and existing Merchant accounts will not be affected. However, we strongly recommend that all merchants complete the steps necessary to meet this new requirement.”

If they ever do get around to requiring PIOF for exisitng merchants, I think we’ll see a few more complaints, but as it currently doesn’t seem to have any implications for exisiting merchants, the news has been well received.

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