Money that cannot be spent outside a single video game does not usually draw the attention of a tax authority. Fortnite’s in-game currency did, for a stretch that ran at least from October 2019 to February 12, 2020, when the Internal Revenue Service (IRS) listed it on a webpage as a form of reportable virtual currency alongside Bitcoin. Nearly four years after that listing was withdrawn, 857 pages of internal IRS correspondence surfaced describing how the decision was made and unmade, though not by whom, or why.
The Release
The correspondence comes from a release filed under the Freedom of Information Act (FOIA), a law allowing the public to request federal agency records. The case, number 2021-01180, was filed with the IRS in 2021 and covered emails, decision papers, memos, and letters. The agency produced 857 pages, about 32 megabytes, released in December 2023. John Greenewald published the archive in full at The Black Vault on December 28, 2023. No table of contents or index accompanies it; the sequence of events has to be reconstructed from the pages themselves, not from any document explaining what they add up to.
What the Pages Describe
By at least October 2019, per a cached version of the IRS’s virtual currency guidance page on Archive.org, the wording read: “Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as ‘convertible’ virtual currency. Bitcoin, Ether, Roblox, and V-Bucks are a few examples of a convertible virtual currency.” That placed Fortnite’s currency alongside an asset that can actually be exchanged for dollars.
V-Bucks cannot be. Epic Games called the description inaccurate at the time, stating V-Bucks cannot be traded between users or exchanged into U.S. currency. That gap fed confusion among gamers, tax preparers, and legal commentators trying to work out what the classification meant in practice.
On February 12, 2020, after CNN and other outlets questioned the IRS about the policy, the agency edited the page. Roblox and V-Bucks were removed as named examples; Bitcoin stayed. No memo or public notice accompanied the change. Reporters got one sentence: “The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion.” IRS Chief Counsel Michael Desmond told reporters separately that including the game currencies had been a mistake.
The Internal Discussion
That is where the public record stood until the FOIA release in December 2023. Per The Black Vault’s account of the correspondence, IRS staff can be seen acknowledging to one another that the classification had been made too hastily, and struggling to settle on a coherent response for the press. The pages also show a broader, unresolved internal discussion about how virtual currencies generally should be defined and taxed.
Bleeding Cool’s coverage of the same release adds that the documents show a rushed decision without indicating why it was rushed, and an attempt at a fuller public statement that was never finished. The Black Vault reports it could not pull specific quotations from the files, citing limited review time, and describes the internal tone only as cautious and evolving.
The Fix That Wasn’t Announced
Nothing in the release points to a formal correction beyond the webpage edit and the single sentence given to reporters. No press release followed, no notice citing a superseding memo. Internally, the record treats the edited page as the end of the matter.
It was also a narrower fix than it looked. Removing V-Bucks and Roblox as named examples did not touch the IRS’s underlying definition of convertible virtual currency, as one analyst quoted by Vice pointed out: the examples were cut, the definition was not. Whether a game-currency transaction counts as reportable stayed a separate question from whether V-Bucks appeared on a webpage, one the record does not show the IRS ever resolving.
What the Record Doesn’t Say
Several things stay open. There is no exact date for when the classification was decided internally, or when internal talk of reversing it began; the one fixed date on record is the public one, February 12, 2020. No individual is named inside the internal discussion itself, which runs in institutional voice throughout, unlike Desmond’s on-record comment to reporters, which came from outside the FOIA documents. No direct quotations from the internal emails have been published, by The Black Vault’s own account. Whether the agency ever said anything beyond that one sentence to the press in 2020 is not established either way by the 857 pages. None of that is evidence of concealment. It describes what a bulk records release contains and does not: correspondence produced under FOIA, without the narrative that would explain who decided what, or when.
The Black Vault’s Reading
The Black Vault’s own framing of the release describes the IRS as quietly avoiding accountability for the reversal, changing its guidance rather than owning the mistake in public. That is the outlet’s reading of what the pages amount to; it is not a conclusion stated inside the 857 pages themselves. Bleeding Cool’s coverage went further, describing the agency as either ill-equipped or uninformed at the time, rushing a decision out before working through the question properly.
What the correspondence itself shows is narrower: a classification made in haste, by the agency’s own internal account, an edit made with no explanation beyond one sentence to reporters, and a fuller statement that never surfaced. Whether that adds up to avoidance or to an agency that never found the words for an awkward error is not a question the correspondence answers.
The 857 pages remain posted at The Black Vault under the case number that produced them, 2021-01180. They show that the IRS knew, at some point, that it had moved too fast. They do not show who decided to move, or why. That part of the file is simply not there.