And I'm sure after a story like this, it will become extremely popular:

If you are a hard-core player of virtual worlds like World of Warcraft, Second Life, EverQuest or There, IRS form 1099 may someday soon take on a new meaning for you.

That's because game publishers may well in the not-too-distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons or Second Life currency, even when those players don't convert the assets into cash.
...
"Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues," said Dan Miller, a senior economist with the Congress' Joint Economic Committee, who is also a fan of virtual worlds. "So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way."

Look, I'm willing to throw the government a bone here.  If someone sells their virtual assets on eBay, then paying some sort of tax on that would be reasonable.  But having to pay tax on a virtual asset, that stays virtual is beyond stupidity.  This once again proves that government isn't looking to collect taxes in order to make a budget... they're looking to collected "their share" of whatever you make, wherever you make it.  They don't view your money as... well... your money.  They view it as their money, and themselves as the benevolent caretakers of that money, and what little they let you keep is a generous stipend that you are allowed to use to live you life.

I'm waiting... desperately waiting... for people to wake up and realize what an overbearing behemoth all government has become, and for people to wake up to the fact that government representatives don't give two figs about you, your life, and your desires.  They'll do what they want to do, and hope that by throwing you some cash later on (which ironically you gave them in the first place), you'll accept it.