Any business that goes online to find customers is finding themselves under siege by regulators and tax collectors from multiple states, despite Supreme Court rulings that limit states’ cross-border taxing powers.
Online retailers have become a convenient scapegoat for brick-and-mortar stores looking to cast blame for the rapid contraction in retail jobs in recent months.
It’s become a such a common refrain in reports about job losses in the retail industry that it has almost become gospel.
But upon closer inspection, it’s clear that retailers have only themselves to blame for the bubble they created—a bubble that is finally bursting.
The Internet has democratized access to information and delivered a dazzling array of free online services, like search, news, maps, and social media. But imagine a world where the next time you use a search engine, instead of seeing results, you see a requirement to enter a credit card. Or the next time you visit USA Today there is fewer content and even more ads on the screen.
In this alternate world, you are bombarded with pop-ups and interstitials, all of which are asking for consent in various ways: blanket consent for use of all “sensitive” information, consent for use of some sensitive information, consent for use of sensitive and non-sensitive information, and so on.
It’s hard to argue that this world would be an improvement for user experience, much less user privacy.
Nonetheless, this troubling future could become a reality if Congress passes the “BROWSER Act” – legislation that requires online websites and services to get affirmative consent from users before serving any ads based on their interests. The proposed legislation would create a nightmare “opt-in regime for interest-based ads.”
READ MORE at The Hill
Steve DelBianco is on the shameless-tax-grab side. He leads NetChoice, a national trade association representing e-commerce sites. He says under this strange Massachusetts theory, “your business is subject to the taxation [and] regulation in any state where a user simply enters their website address. That can’t hold up to legal scrutiny, because it certainly doesn’t hold up to common sense.”
DelBianco is not convinced a cookie on your computer is the same thing as a storefront in a strip mall. He’s willing to take that argument to court, and says his group is pursuing an injunction to block enforcement of the law before it goes into effect in July.
Steve DelBianco is on the shameless side. He leads NetChoice, a national trade association representing e-commerce and online businesses.
“Massachusetts has this unique theory of electronic presence,” DelBianco said. “But under that theory, your business is subject to the taxation [and] regulation in any state where a user simply enters your website address. That can’t hold up to legal scrutiny, ’cause it certainly doesn’t hold up to common sense.”
For DelBianco, the only option left is a legal challenge to fight the idea that a cookie on your computer is the same thing as a storefront on Newbury Street. He said his group has sued a number of other states for online sales tax laws and he’s looking at a legal fight in Massachusetts too.
“We’re researching the legal arguments and raising the funds to pursue a lawsuit right now,” DelBianco said. He said it’s “too soon to say when we’ll be ready.”
Technology has given us more freedom to choose the way we work, live, travel, and shop. But many Americans are hitting bureaucratic roadblocks on their way find full-and part-time work with peer-to-peer services like Lyft, Postmates, and Handy. These roadblocks are not just bad for workers, but also for consumers, commerce, and the tax revenue that comes with it.
Some of these roadblocks are intentionally created by incumbents trying to prevent competition. But others are just legacy rules and laws that impede the fast-moving trend of workers moving into more flexible, freelance forms of employment.
Fellow drivers in Seattle are in danger of losing many of the freedoms that make ridesharing so appealing. Drivers no longer would be able to work when, where and how long they want. They could be forced into legally binding agreement that mandate minimum or maximum working hours and limit their shifts to certain days or set times.
While attending the University of Chicago, my dad, like many college students, often stopped by his favorite pizza parlor for some choice deep dish pan pizza. Since then, many of the mom and pop pizza parlors he frequented have migrated online to serve a larger customer base and cut down on brick and mortar expenses. But with the impending passage of SB 1502, these Illinois mainstays of the community might be facing burdensome costs that provide no real benefit to them or their customers.
SB 1502 would require the operator of a commercial website or online service to notify customers anytime information about them is collected or disclosed. This information can be for germane purposes and operational maintenance to reasons related to the nature of the website. Read more
Minnesota state legislators’ push to impose unprecedented sales tax obligations on Internet marketplaces has little support from Minnesotans, according to a new poll jointly released by NetChoice and Americans for Tax Reform (ATR).
Only nine percent of Minnesotans think that the current online sales tax collection process needs to change. Yet, leaders of Minnesota’s legislative tax committees continue to promote legislation (HF4 and SF 2225) that would now require out-of-state businesses to collect online sales tax from Minnesotans. Read more
“Union and Constitution.” These words appear on the Great Seal of Colorado and celebrate the ideals enshrined in the Federal Constitution, including the rights of freedom of expression and privacy.
Sadly, in 2010, the Colorado legislature enacted a tax reporting law that assaults those rights. The aptly nicknamed Colorado “tattletale” law requires online and catalog businesses to report to the state Department of Revenue (DOR) Colorado shoppers’ purchases, including the name of the catalog or online store where the shopper made purchases; the shopper’s name and address; and the amount the shopper spent on products or services.
Thankfully the legislature soon will have the opportunity to restore Colorado residents’ privacy rights later this Spring with SB 17-238, which if passed would repeal the tattletale reporting provision. Read more
I have many fond memories of growing up in my hometown of Columbia MD – several of them are of the times I had with friends and family at the Merriweather Post Pavilion. I remember using the money I earned from delivering the Columbia Flyer to buy tickets to its concerts. I remember my Wilde Lake High School wrestling team providing security for its events. I remember seeing the Symphony of Lights and my high school graduation ceremony at Merriweather.
To me, these types of experiences are the cornerstone of so many positive memories, which is why I am saddened that companies like Ticketmaster are increasingly using ticket restrictions and inconveniencing fans.
Steve DelBianco, executive director at NetChoice, said there are three scenarios in a “keep Quill” landscape:
- States will claim that Quill doesn’t apply to specific taxes, such as Ohio’s commercial activity tax and Washington’s gross receipts tax. In November 2016, the Ohio Supreme Court declined to extend Quill to the state’s business privilege tax. A petition requesting the high court’s review is expected in April.
- States will continue to enact legislation that aren’t “kill Quill” laws, but are “creative extensions of nexus” to “withstand the physical presence” rule — such as affiliate, click-through and marketplace provider regimes. While those regimes recognize physical presence as the rule, they define physical presence as including a relationship with an in-state entity that has physical presence.
- States will pursue “tattletale reporting tactics,” such as the Colorado and Louisiana laws that mandate non-collecting remote vendors to report consumers’ purchases to the state.
“Goodlatte’s bill confirms the physical presence standard with specificity, and then goes on to open the door to a multistate compact that allows home state enforcement on remote sales,” DelBianco said, adding that “the beauty of the congressional approach, of either Sensenbrenner or Goodlatte, is they in fact would stop the madness of all these state bills.”
DelBianco noted that Amazon’s business model has led to its expansion into more states to provide faster fulfillment. Likewise, competition over customer service and rapid shipping will encourage other retailers to expand their physical footprint, thus triggering collection obligations in more locations.
There is a lot of talk in the state Legislature these days about taxes — from tax hikes on marijuana and new taxes for improved transportation to reduced taxes on business personal property and even eliminating taxes on some personal hygiene products.
However, lawmakers may want to add one more tax-related issue to this robust debate — a re-examination of rules that would make the Department of Revenue privy to the personal online shopping habits of Coloradans.
Six years ago, state lawmakers addressed the internet sales tax issue through legislation. It was a fatally flawed law, aimed at increasing collection of sales and use taxes for purchases made online or through catalogs. Lurking in that bill was a dangerous intrusion into the private lives of Colorado citizens.
The U.S. Constitution and Supreme Court precedent protect Indiana’s businesses from the scourge of Chicago and New York tax collectors.
Today, Indiana businesses, whether selling online, over the phone or via catalog, only must collect sales taxes for purchases to Indiana consumers. The businesses only must file taxes with the Indiana tax collectors and face audits from Indiana auditors.
As a result, Indiana’s main street businesses, such as Burton’s Maple Syrup in Medora, easily can use the Internet to reach customers across the country.
But it appears some lawmakers in Indianapolis are prepared to upend these protections and expose Indiana businesses to tax collectors from across the country.
Overwhelming Majority Say State Should Not Be Collecting Personal Information on Shopping Habits, NetChoice Survey Finds
An overwhelming majority of Coloradans believe a state law forcing online and catalog businesses to report personal purchase information to state tax authorities is an invasion of privacy, per a new NetChoice survey of Colorado residents.* Residents also view the law’s misguided aim to collect sales and use taxes as a statewide tax increase.
Fully 78 percent of Coloradans said the state should not be allowed to force businesses to turn over information on their internet purchases, including the retailer’s name, the customer’s name, the billing address, the shipping address, and the amount of purchases. Read more
Twenty-five years ago, Seinfeld warned us of the dangers of double-dipping. However, double-dipping is not relegated only to hors d’oeuvres and sitcoms. In the real world, Ticketmaster has perfected the double dip, reaping billions of dollars by managing events and selling tickets on the primary market.
For years, Ticketmaster has dipped into the revenues of bands and other acts via its Live Nation Entertainment Group and then dipped into the discretionary income of consumers, charging fees per ticket sale on the primary market.
Now, the company has its sights set on a new challenge: the triple dip.
The FTC has said time and time again that “consumers don’t read privacy policies.” They’ve been doing this for nearly a decade. In 2007, then-Federal Trade Commissioner Jon Leibowitz declared that “in many cases, consumers don’t notice, read, or understand the privacy policies.” Likewise, study after study has substantiated this fact.
Of course, it doesn’t take an FTC chairman, or a researcher to tell us this, we all know that we rarely, if ever, read the privacy policies we’re presented.
By Jonathan Johnson, Chairman of the Board of Overstock.com
Utah’s Gov. Gary Herbert and other internet tax proponents proclaim Utah’s uncollected e-commerce sales tax has reached $200 million a year. It’s a large number. And it’s largely wrong.
Supposedly, the shortfall results from out-of-state e-commerce retailers not collecting Utah sales taxes. But is $200 million the number right? It doesn’t seem to add up.
Here’s a back-of-the-envelope calculation of all 2016 e-commerce sales taxes due in Utah:
• The 2016 total U.S. retail e-commerce is $392 billion (estimates from Internet Retailer and eMarketer).
• Utah’s e-commerce visit share is 0.84 percent, based on the assumption e-commerce sales are proportionate to visits (Source: Hitwise and Connexity); coincidentally, that figure approximates Utah’s population proportion of about 0.9 percent.
• The average Utah sales tax rate is 6.53 percent (https://www.salestaxhandbook.com/utah).
• Therefore, Utah’s total e-commerce sales tax due — collected or not — would be $215 million: ($392 billion x .0084) x 0.0653 = $215 million.
If this calculation is correct, then either Utah is not collecting more than 90 percent of its e-commerce sales taxes, or the governor’s $200 million figure is wrong