NetChoice in the News

BNA Bloomberg - Digital Sales Tax Bill Set for House Subcommittee Hearing

“We’re relieved to see that Congress is waking up to the problems caused when states reach across borders to regulate and tax businesses in the country,” Steve DelBianco, executive director of NetChoice, told Bloomberg BNA in a July 18 email. “It’s reached a crisis in the area of remote sales tax, where states are creating chaos with unconstitutional and illegal regulations and laws.”

Several e-commerce trade associations applauded the hearing announcement.

“Sensenbrenner’s bill deserves attention because it has the potential to hit the pause button on state cross-border regulation, so that Congress can exercise its constitutional authority over interstate commerce,” DelBianco said.

“In recent years, rogue states have attempted to target out of state businesses to comply with onerous tax collection regimes that ran afoul to the Supreme Court precedent,” Hamilton Davison, president and executive director of the American Catalog Mailers Association (ACMA), said in a statement. “We applaud the U.S. House Judiciary Committee for holding this hearing and proposing much-needed solutions like Rep. Sensenbrenner’s No Regulation Without Representation Act.

“It’s a sound piece of legislation that would provide clarity and regulatory relief for remotely located catalog and e-commerce businesses that sell their products nationally,” Davison said.

An increasing number of states have passed legislation or regulations in recent years to challenge the Quill rule and enforce taxes on out-of-state sellers. NetChoice and ACMA are parties in several legal challenges to states’ remote sales regimes, including South Dakota, Indiana, Tennessee and Wyoming.

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NPR Illinois - Illinois Issues: The Battle Over Transparency And Privacy In The Digital Age

“[The bill] would require business to keep and store more user information than they have to today, says Carl Szabo, senior policy counsel for NetChoice, a Washington, D.C. trade association of ecommerce businesses and online consumers that advocate for fewer restrictions for online businesses.  Some of its members include companies like Lyft, eBay and Facebook.

“This bill actually puts potentially consumer information at greater risk than it’s at today because you are forcing businesses to create a honey pot of information,” he says.

Others like Szabo, from NetChoice, say that any additional legislation will hurt Illinois and continue to provide a so called “chilling effect” for tech companies that want to expand their areas of innovation. Illinois he says, is a state with laws that are already tough on privacy. The Biometric Information Privacy Act, for example, aims to regulate how companies collect, use, handle and store biometric identifiers and biometric information. According to the Act, biometric identifiers can be anything from “a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” Without explicit consent from consumers, a website or app can’t collect or store such data. There is some facial recognition software, Szabo says, that cannot be used in Illinois.

No other state, he says, has come close to the level of privacy regulation as Illinois has.

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Illinois News Network - Business and tech groups say geolocation is unnecessary and will confuse consumers

Carl Szabo from NetChoice, an e-commerce trade association, said the language about location in the proposed law is too vague and could cause unexpected effects, such as difficulty retrieving a stolen or lost phone.

“Today, you can call up your carrier and have them help you track down the phone. This bill could make that illegal because they would need to get express opt-in consent from you before they can engage in that feature, and you would have had to opted in to that on the phone itself,” Szabo said. “So once it’s gone you may not be able to get it back.”

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BNA Bloomberg - Ohio ‘Cookie Nexus’ for Online Sales Tax Likely to Crumble

NetChoice and the American Catalog Mailers Association “are researching legal arguments and raising funds to challenge Ohio’s new remote sales tax law,” Steve DelBianco, executive director of internet commerce trade group NetChoice, told Bloomberg BNA through email. “If the state has violated Supreme Court precedent and the Internet Tax Freedom Act, we look forward to our day in court. Moreover, we don’t see how a court will agree that electrons flowing into a computer or smartphone can possibly create a ‘physical presence.’”

NetChoice and ACMA recently sued and prevailed on procedural grounds against a similar Massachusetts directive. That directive worked in a similar way to create a tax based on physical presence in the state proven by cookies installed on computers or phones.

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Pioneer Institute – The Internet Sales Tax: Gone But Will It Be Back?

Pioneer Institute – The Internet Sales Tax: Gone But Will It Be Back?

Not everyone agreed with the DOR’s definition of physical presence. After the directive was issued, two business advocates NetChoice and the American Catalog Mailers Association (ACMA) mounted a legal challenge to it. After initial arguments were presented, the DOR pulled the proposal.

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Business Advocate – North Carolina: Remote sales tax bill stalls

Business Advocate – North Carolina: Remote sales tax bill stalls

On April 30, 2017, Netchoice sent Gov. Holcomb a letter asserting that HB 1129 “will be seen by Indiana consumers as a new tax and could erode your ability to protect Indiana businesses from out-of-state tax collectors” because it “encourages other states to create similar laws that would impact Indiana sellers.”

Netchoice asserted that Indiana’s HB 1129 would also

  • Rely on new revenue extracted from Indiana residents – not from out-of-state businesses.
  • Generate only minimal new tax revenue.
  • Establish a new tax regime that is anything but equal, consistent, or fair.

Citing its own poll of Tennessee residents on a similar tax there, Netchoice contended that 56 percent of those residents said that “requiring them to pay tax on online purchases from out-of-state businesses would be a statewide tax increase.” Netchoice opined that it would “likely see similar results in a poll of Indiana citizens.”

Bolstering its position with a reference to the case South Dakota v. Wayfair Inc. et al, Netchoice promised that the same outcome, the court’s dismissal, would occur, which would not only prohibit Indiana from enforcing the law on out of state retailers, but force Indiana to “fritter[] away tax dollars on an unnecessary lawsuit” that it is bound to lose anyway.

Furthermore, Netchoice declared, the new tax would not actually generate new revenue, because most of the top e-retailers, like Amazon, already collect in Indiana, and what little new revenue would come in is not enough “to justify the legal costs and erosion of state sovereignty.”

Nor does a remote sales tax law level the playing field between retailers located within and outside the state, argued Netchoice. Instead, “HB 1129 foists disproportionate collection burdens on catalog and online retailers. When a customer enters a gift shop in Indianapolis, the store does not ask for that customer’s home address so she can look-up the tax rate and later remit the tax to the customer’s home state.”

Ultimately, Netchoice made a threat which, given its activity in this area, is not so empty: “We ask that you remove the remote seller tax collection language from HB 1129 and protect Indiana businesses from out-of-state tax auditors, protect Indiana citizens from a new tax, and avoid costly litigation the state is likely to lose.”

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BNA Bloomberg - Washington’s Marketplace Sales Tax Law Heading for Battle

“We definitely anticipate a legal challenge,” Steve DelBianco, executive director of the e-commerce trade association NetChoice, told Bloomberg BNA July 10. “NetChoice and the American Catalog Mailers Association are now developing legal arguments and raising funding for a lawsuit.”

DelBianco said Washington’s $10,000 threshold is particularly problematic, calling it “a significant burden on America’s small businesses. Washington’s new law reaches the tiniest of businesses anywhere in the country if they happen to have customers in Washington state.”

Washington’s imposition of tax and reporting requirements on marketplace facilitators “would be unique, since these facilitators are not the seller of record,” DelBianco added. He accused the new law of targeting facilitators and marketplaces in what amounts to discrimination against electronic commerce, which is prohibited under the Internet Tax Freedom Act.

“We’ll also challenge the privacy violations that this would bring on Washington residents, as the state would now be collecting data on their personal and sometimes sensitive Internet purchases,” he said.

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Forbes - Amazon Prime Day Deals Aren't Tax-Free In 2017

NetChoice, a trade association of Internet companies and organizations, and American Catalog Mailers Association (“ACMA”), a trade association representing the interests of companies, individuals, and organizations engaged in and supporting catalog marketing, disagreed. In June, the two organizations filed suit to stop the new rule from taking effect. Among the arguments in the lawsuit were allegations that the Commonwealth had not followed proper procedures with respect to the directive.

The rule, which was expected to take effect on July 1, 2017, was eventually revoked. However, it’s not completely buried. I fully expect to see it again after some procedural tweaks. And other states are watching closely to see what happens. If the revised rule successfully moves forward, it could change the way that state revenue departments view – and tax – online sales from out of state retailers.

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Don't Mess With Taxes - Amazon Prime Day and Washington's new marketplace, tattle-tale law shine spotlight on online sales tax collection

NetChoice, a trade association focusing on electronic commerce, reportedly is developing legal arguments and rounding up money to challenge the plan.

“Washington is not likely to see any new revenue from this law, since a court would bar enforcement while legal challenges are resolved,” Steve DelBianco, executive director of NetChoice, told the Tacoma News-Tribune in an email. “So nobody in Olympia should be counting on new tax revenue in the near term.”

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Small Business Advocate Radio – Why Massachusetts bailed on remote sales tax collection

Why Massachusetts bailed on remote sales tax collection

Debating the merits of not taxing Internet sales

Could a global congress on trust help control digital fear and greed

BNA Bloomberg - Indiana Caught in Web of Digital Sales Tax Lawsuits

The complaint filed by Washington-based NetChoice and the American Catalog Mailers Association (ACMA) asks an Indiana trial court to strike down the state’s recently passed gross retail tax that applies to sellers without a physical presence in the state ( Am. Catalog Mailers Ass’n. v. Krupp , Ind. Super. Ct., No. 49D01-1706-PL-025964, complaint filed 6/30/17 ).

“We are confident that the court would grant an injunction barring enforcement of the Indiana law, just as a South Dakota court did in March by invalidating a nearly identical law there,” Steve DelBianco, executive director of NetChoice, told Bloomberg BNA by email. NetChoice, along with the ACMA, has also sued South Dakota and Tennessee over their remote sales tax regimes. They withdrew litigation in Massachusetts after the state revoked a directive ordering digital retailers to begin collecting state sales tax.

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BNA Bloomberg – Wyoming Boots Up Online Sales Tax Lawsuit, Joins Four Others

BNA Bloomberg – Wyoming Boots Up Online Sales Tax Lawsuit, Joins Four Others

Steve DelBianco, executive director of NetChoice, said Wyoming won’t be able to compel online retailers to collect the tax while the case is litigated. The law originally required retailers to commence complying on July 1.

“By operation of the underlying statute, enforcement of the law is enjoined during the pendency of the litigation,” DelBianco told Bloomberg BNA through email.

The dispute in Wyoming mimics a battle in South Dakota involving a nearly identical statute. Under S.B. 106 (codified as S.D. Codified Laws Chapter 10-64), nexus is triggered for remote retailers with annual in-state sales exceeding $100,000 or 200 separate transactions. South Dakota’s law has been attacked by many of the same online retailers named in Michael’s lawsuit. The state’s Sixth Judicial Circuit Court found the law unconstitutional under Quill, and the matter is now before South Dakota’s Supreme Court.

The Wyoming lawsuits broaden the battle over internet sales taxes, with other lawsuits pending in Alabama, Indiana, and Tennessee.

WBUR Radio Boston - Innovation Roundup: Online Sales Tax; Sexism In Venture Capital; Gig Economy

We check-in on the status of a proposal to tax online sales, which prompted a lawsuit by NetChoice, a national trade association representing online retailers, and the American Catalog Mailers Association against Massachusetts.

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NW News Network - Online Sales Tax That Undergirds Washington Budget Likely To Be Challenged

But can the state really count on that? The director of NetChoice, a trade association for Internet companies, said his team is actively developing legal arguments and lining up funding to challenge the tax expansion.

NetChoice has battled state tax collectors for more than a decade. 


“We have an excellent track record of challenging laws,” NetChoice Executive Director Steve DelBianco said in an interview Wednesday. 


DelBianco argued the imposition of the internet sales tax would place “an undue burden on interstate commerce” and could “boomerang” back on home state e-commerce businesses if it inspires other states to tax their cross-border sales. 


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Gloucher Times - State backs off online sales tax — for now

But NetChoice — which represents Overstock.com, eBay, PayPal and other online retailers — argued that the Baker administration didn’t have legal authority to tax businesses with no actual presence in Massachusetts. The American Catalog Mailers Association also signed onto the lawsuit.

“The new rule blatantly violates the provisions of Internet Tax Freedom Act, a statute crafted by Congress — and made permanent in 2016 — specifically to prevent the kinds of state tax obligations purportedly created by the directive, namely, those targeting internet vendors precisely because the vendors engage in electronic commerce,” the group argued in its lawsuit.

NetChoice Executive Director Steve DelBianco said the state also violated administrative procedures by not holding public hearings on the new rule.

“State tax collectors must have been working in a dark basement in Boston, since they developed and adopted this regulation without public comment or even a single public hearing,” he said.

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Associated Press - Indiana will likely go to court over online sales tax

Opponents of online sales tax, such as e-commerce businesses trade association NetChoice, argue it would be “bureaucratic gymnastics” for companies to have to adhere to differing tax codes in every city and state.

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Also in:

Sacramento Bee

Argus Press

Chesterton Tribune

TaxNotes - Massachusetts swallows tax on internet cookies … for now

Just weeks before it was set to take effect, Directive 17-1 was challenged by NetChoice and the American Catalog Mailers Association (ACMA). They charged the directive was “invalid and unenforceable” because it was published without advance notice, it discriminated against internet sellers, and it taxed out-of-state sellers with no physical presence in Massachusetts.

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Progressive Liberal - Is Trump Trying to Tackle Internet Sales Tax? – His Tweet About Amazon Suggests Maybe

Carl Szabo is senior policy counsel at Netchoice which represents e-commerce businesses.  He pointed out to the Hill that the 2013 legislation would subject business owners to thousands of taxing jurisdictions. The new tax codes would be “enough to make it near-impossible for small businesses to compete online,” Szabo said.

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The Hill - Trump reopens fight on internet sales tax

Carl Szabo — senior policy counsel at NetChoice, which represents e-commerce businesses — said that he’s concerned that legislation like the 2013 bill would subject businesses to thousands of taxing jurisdictions and put them within the reach of multiple state tax auditors. That would be “enough to make it near-impossible for small businesses to compete online,” he said.

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Boston Herald - DOR scraps online tax plans

The lawsuit was filed by the American Catalog Mailers Association and NetChoice, which represents online retailers and had called the directive an “unconstitutional tax grab.” NetChoice executive director Steve DelBianco said the groups wouldn’t hesitate to refile their suit if the state continues to pursue the tax collections.

“I don’t see how any court will agree that electrons flowing into a computer or smartphone comes anywhere near a physical presence,” DelBianco said.

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