If you ever open a store where you sell works of art, and request that your customers pay you in casino chips because that way they don't need to pay sales taxes (because "nothing of value has been exchanged due to the lack of real money involved") and then you go to your neighbor's store and buy something with those casino chips (or even just go to the casino and gamble with them)...
You will rapidly find that the government believes you have just set up an alternate system of currency, and wishes to tax you on it, because what currency you pay in has no bearing on your obligation to pay sales taxes, income taxes, etc.
For reference, this came up with frequent flier miles as well; they are a completely monetary way of compensating someone if they are freely transferrable (which they were on some airlines, briefly). The government pointed out to said airlines that bits on a computer saying "bob has X miles" looked an awful lot like bits on a computer saying "bob has X dollars", and that with the freely transferrable ones you could change dollars to miles (almost every airline lets you just buy them if you care to), and you could ebay them to get dollars back, so the airline was running a bank with all deposits in a foreign currency. This means that the airline was subject to all the banking regulations... And currency market regulations... And seizure of assets regulations should they ever change the rules under which you could redeem them...
This also came up with various people creating new currencies: you give them some cash, and they record that you own some "e-gold" or whatever; you then spend this e-gold in ways that look a lot like using a credit card; the merchants then cash it out in ways that look a lot like asking Visa to give them money for all of their transactions. Not surprisingly, the government has ruled that it really doesn't matter if your credit card company denominates your debts/credits in dollars, pesos, rubles, e-gold, "gold pieces", or linden-dollars -- if you're running a credit card company, you should be subject to all the regulations involved in running a credit card company.
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taxing gambling chips
Date: 2006-10-17 11:24 pm (UTC)You will rapidly find that the government believes you have just set up an alternate system of currency, and wishes to tax you on it, because what currency you pay in has no bearing on your obligation to pay sales taxes, income taxes, etc.
For reference, this came up with frequent flier miles as well; they are a completely monetary way of compensating someone if they are freely transferrable (which they were on some airlines, briefly). The government pointed out to said airlines that bits on a computer saying "bob has X miles" looked an awful lot like bits on a computer saying "bob has X dollars", and that with the freely transferrable ones you could change dollars to miles (almost every airline lets you just buy them if you care to), and you could ebay them to get dollars back, so the airline was running a bank with all deposits in a foreign currency. This means that the airline was subject to all the banking regulations... And currency market regulations... And seizure of assets regulations should they ever change the rules under which you could redeem them...
This also came up with various people creating new currencies: you give them some cash, and they record that you own some "e-gold" or whatever; you then spend this e-gold in ways that look a lot like using a credit card; the merchants then cash it out in ways that look a lot like asking Visa to give them money for all of their transactions. Not surprisingly, the government has ruled that it really doesn't matter if your credit card company denominates your debts/credits in dollars, pesos, rubles, e-gold, "gold pieces", or linden-dollars -- if you're running a credit card company, you should be subject to all the regulations involved in running a credit card company.