US Marketplace Fairness Act of 2013 #Internet Sales Tax
Dear All, It was not that long ago when we were discussing Internet Sales Tax and differing treatments by the OECD members and the US. There are further developments within the US that are interesting with regard to internet sales tax. Two this end, here are two separate pieces on it: - http://www.redstate.com/2013/03/24/26-republicans-vote-for-internet-sales-ta... - An opinion piece on the Market Place Fairness Act, see: http://www.redstate.com/2013/03/18/the-marketplace-fairness-act-is-more-unfa... *Brief Summary on the Marketplace Fairness Act of 2013* The S.336 Marketplace Fairness Act of 2013 introduced on Valentine's day, 2013 and sponsored by US Senator Michael Enzi [R-WY] There are 28 co-sponsors (21D, 6R, 1I). You can track the Bill here: http://www.govtrack.us/congress/bills/113/s336 There is a prognosis that the Bill might not get past the Committee and 0% chance of getting enacted. The H.R.684: Marketplace Fairness Act of 2013 introduced on Valentines's day, 2013 and sponsored by US Rep. Steve Womack [R-AR3] had 47 cosponsors (25D, 22R). There is a prognosis that it has a 28% chance of getting past the committee and 11% chance of getting enacted. You can track the Bill here: http://www.govtrack.us/congress/bills/113/hr684 Kind Regards, Sala -- Salanieta Tamanikaiwaimaro aka Sala P.O. Box 17862 Suva Fiji Twitter: @SalanietaT Skype:Salanieta.Tamanikaiwaimaro Tel: +679 3544828 Fiji Cell: +679 998 2851 Blog: salanieta.blogspot.com
It was not that long ago when we were discussing Internet Sales Tax and differing treatments by the OECD members and the US. There are further developments within the US that are interesting with regard to internet sales tax. Two this end, here are two separate pieces on it:
What does this have to do with anything that ICANN or NARALO does? Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly
On Mon, Mar 25, 2013 at 10:42 AM, John R. Levine <johnl@iecc.com> wrote:
It was not that long ago when we were discussing Internet Sales Tax and differing treatments by the OECD members and the US. There are further developments within the US that are interesting with regard to internet sales tax. Two this end, here are two separate pieces on it:
What does this have to do with anything that ICANN or NARALO does?
1. Is the business of selling domain names subject to "sales tax"? 2. Do you have Registrars or resellers positioned across different parts of the United States? 3. Are their core businesses "taxable"? If the answers to (1) and (2) are in the negative, then the Bill has nothing to do with ICANN but from experience Bills have a habit of changing form and so under those circumstances, we need to be aware of how this changes. Anything that happens in the United States has a direct implication on the rest of the world particular as far as governing of critical internet resources go.
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly _______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
-- Salanieta Tamanikaiwaimaro aka Sala P.O. Box 17862 Suva Fiji Twitter: @SalanietaT Skype:Salanieta.Tamanikaiwaimaro Tel: +679 3544828 Fiji Cell: +679 998 2851 Blog: salanieta.blogspot.com
1. Is the business of selling domain names subject to "sales tax"?
No.
2. Do you have Registrars or resellers positioned across different parts of the United States?
Yes, but it's irrelevant.
3. Are their core businesses "taxable"?
No. What does this have to do with ICANN or anything related to NARALO? R's, John
On 24 Mar 2013, at 19:30, John R. Levine wrote:
1. Is the business of selling domain names subject to "sales tax"?
No.
Besides I thought the names were not sold but rather that use were licensed with right of renewal. I admit that to non lawyer like me the difference is tenuous. But there is a difference. I am sure.
2. Do you have Registrars or resellers positioned across different parts of the United States?
Yes, but it's irrelevant.
what does irrelevance have to do with anything? why is it relevant?
3. Are their core businesses "taxable"?
No.
Well sort of depends on what their core business is. Well actually isn't it income and assets that are taxable?
What does this have to do with ICANN or anything related to NARALO?
Well somebody at ICANN on the At-Large list thought it was interesting and the At-Large list is sort off a catch-all for things people think are interesting that might-maybe-could have a relationship to ICANN stuff. And if they really are not going to affect ICANN stuff, then maybe an explanation would have been a cool thing to offer. cheers avri
1. Is the business of selling domain names subject to "sales tax"?
No.
Besides I thought the names were not sold but rather that use were licensed with right of renewal. I admit that to non lawyer like me the difference is tenuous. But there is a difference. I am sure.
Court decisions say they're sold in California, licensed in Virginia. Either way, no sales tax.
3. Are their core businesses "taxable"? No.
Well sort of depends on what their core business is. Well actually isn't it income and assets that are taxable?
No. Sales tax is applied neither to income nor to assets.
What does this have to do with ICANN or anything related to NARALO?
Well somebody at ICANN on the At-Large list thought it was interesting and the At-Large list is sort off a catch-all for things people think are interesting that might-maybe-could have a relationship to ICANN stuff.
Is there any hope at all that we can encourage people to use the ALAC lists to talk about stuff relevant to ICANN, or are people so undisciplined that it's all noise? R's, John
What does this have to do with anything that ICANN or NARALO does?
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies",
*The US Congress Tax Freedom Act – Let Me Go, I want to Breathe* Well it not new that the US has always maintained that the Internet should be a tax free zone as per the *US Congress's Tax Freedom Act 1998* (*authored by Representative Christopher Cox and Senator Ron Wyden and signed into law on October 21 1998 by then President Clinton*) which following expiry continued to be reauthorised and it most recent re-authorisation (legal speak for extension) was in October 2007 where this has been extended till 2014. It is unclear whether there will be another extension post 2014. There is a moratorium on new taxes on e-commerce, and the taxing of internet access via the Tax Freedom Act. Whilst the US Congress's Tax Freedom Act 1998 bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet only taxes such as bit taxes, bandwidth taxes and email taxes, it also bars multiple taxes on e commerce. It does not exempt sales made on the Internet from taxation, as these may be taxed at the same state and local sales tax rate as non Internet sales. *The US Marketplace Fairness Act – You are strong, you can stand on your feet now* With the introduction of the *US Marketplace Fairness Act in 2013* in both the Senate and the House of Representatives will make for some interesting discussions and lobbying on the Hill. Whilst the Bill in its current form acknowledges the exemptions that are currently in place – the manner in which discussions play out by the manner in which both Senators and Representatives are having reflect a change in atmospheric pressure – which in my mind is significant. In 1998 when US Senate voted 96-2 to approve the Tax Freedom Act and the mere fact that the new Bill has 28 Co Sponsors and in the House of Reps, there are 47 co sponsors speak volume. *To Tax or Not to Tax* As early as 2000, the problems of tax free e commerce were discussed[1]<#_ftn1>. If e-commerce proceeds untaxed, it would mean that state treasuries would face an eroding tax base. States within the United States of America rely on sales tax for approximately 25-40% of their revenue[2] <#_ftn2>. As such there is a trade-off or opportunity cost as other taxes may have to increase to make up for the deficit caused by tax-free e-commerce. *Opportunity Cost and Impact on Other Industries* The deficit caused by tax free e-commerce means that other taxes may be subjected to increase and also potential funding may be siphoned away from other priority areas. Traditional firms or businesses who do no trade electronically are at a disadvantage as they are forced to collect sales tax at the register. This is why it is sometime cheaper to purchase a pair of boots online than if you were to walk into a traditional store. *Widening the Digital Divide* One of the issues that was discussed in the E commerce round table meeting was the widening of the digital divide where people without credit cards or Internet access may be forced to shoulder the burden of sales tax[3]<#_ftn3> . *E Commerce has truly blossomed* The term ``electronic commerce'' means any transaction conducted over the Internet or through Internet access, comprising the sale, lease, license, offer, or delivery of property, goods, services, or information, whether or not for consideration, and includes the provision of Internet access. Global business-to-consumer e-commerce sales will pass the 1 trillion euro ($1.25 trillion) mark by 2013, and the total number of Internet users will increase to approximately 3.5 billion from around 2.2 billion at the end of 2011, according to a new report by the Interactive Media in Retail Group (IMRG), a U.K. online retail trade organization[4] <#_ftn4>. The study estimates that business-to-consumer e-commerce sales in 2011 increased to 690 billion euros ($961 billion), an increase of close to 20% from a year earlier[5] <#_ftn5>. According to that study, the US remains the world’s largest single market as far as e commerce goes. The same study highlighted that with China’s phenomenal growth rates that it is speculated to surpass the United States in this regard shortly. The US Department of Commerce[6] <#_ftn6> reported that Total Retail Sales from the fourth quarter of 2012 was estimated at *$1,105.8 billion* which is an increase of 4% from the third quarter of the same year. *ICANN and its Revenue Streams* The explosive growth of the Internet and domain name registration has led to marked growth of the ICANN budget from revenues of about $6 million and staff of 14 in 2000, to revenues of $90million and a staff of 149 which was forecasted for 2012[7] <#_ftn7>. ICANN is funded primarily through fees paid to ICANN by Registrars and Registry Operators[8] <#_ftn8>. Registrars are companies with which consumers register domain names and these include but are not limited to the likes of GoDaddy, Network Solutions and Google. Registry Operators are companies and organisations that operate and administer the master database of all domain names registered in each top level domain. For example, .com is operated by Verisign Inc and Neustar Inc. operates .biz . In 2011, ICANN received 94% of its total revenues from registry and registrar fees. That is Registry Fees contributed 49% and Registrar fees contributed 45% from registrar fees[9] <#_ftn9>. Without a doubt, the collection of fees from the new gTLD program could contribute to an unprecedented level of revenue for ICANN. It has been estimated that ICANN will generate revenue of $337million from the new gTLD application fees, which is twice the amount of traditional revenues from all other sources over the next couple of years. ICANN estimates[10]<#_ftn10>that there will be a surplus of $27.8 million after operating expenses (OPEX) is met. *List of Interesting Links* · Internet Retail Taxation in the United States - http://www.cj.com/internet-tax [To see State and Legislative Activity] · US Internet Taxation - http://minnesotaattorney.com/internet-taxation/ [Note: material is old and needs revision but it is helpful to see the types of taxes] · Advisory Commission on Electronic Commerce - http://govinfo.library.unt.edu/ecommerce/ITFA.htm * * ------------------------------ [1] <#_ftnref1> 1st E-commerce Roundtable Meeting was held in Washington DC, 12-2 PM on April 13, 2000 [2] <#_ftnref2> ibid [3] <#_ftnref3> ibid [4] <#_ftnref4> See: http://www.internetretailer.com/2012/06/14/global-e-commerce-sales-will-top-... [5] <#_ftnref5> ibid [6] <#_ftnref6> http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf [7] <#_ftnref7> ICANN, FY13 Operating Plan and Budget, June 24, 2012, available at http://www.icann.org/en/about/financials. [8] <#_ftnref8> The list of ICANN-accredited registrars is available at http://www.icann.org/en/registries/agreements.htm. [9] <#_ftnref9> ICANN Financials Dashboard, updated June 15, 2011, available at https://charts.icann.org/public/index-finance-fy11.html. [10] <#_ftnref10> ICANN, FY13 Operating Plan and Budget, June 24, 2012, p. 61, available at http://www.icann.org/en/news/announcements/announcement-13jul12-en.htm. -- Salanieta Tamanikaiwaimaro aka Sala P.O. Box 17862 Suva Fiji Twitter: @SalanietaT Skype:Salanieta.Tamanikaiwaimaro Tel: +679 3544828 Fiji Cell: +679 998 2851 Blog: salanieta.blogspot.com
Also relevant is ICANN's Application for Tax-Exempt Status, see: http://archive.icann.org/en/financials/tax/us/appendix-4.htm Sala
Dear All, Following the short exchange with John, I decided to blog about it: http://www.circleid.com/posts/20130325_to_tax_or_not_to_tax/ Kind Regards, Sala On Mon, Mar 25, 2013 at 6:37 PM, Salanieta T. Tamanikaiwaimaro < salanieta.tamanikaiwaimaro@gmail.com> wrote:
Also relevant is ICANN's Application for Tax-Exempt Status, see: http://archive.icann.org/en/financials/tax/us/appendix-4.htm
Sala
-- Salanieta Tamanikaiwaimaro aka Sala P.O. Box 17862 Suva Fiji Twitter: @SalanietaT Skype:Salanieta.Tamanikaiwaimaro Tel: +679 3544828 Fiji Cell: +679 998 2851 Blog: salanieta.blogspot.com
OK, you win. I'm out of here. On Mon, 25 Mar 2013, Salanieta T. Tamanikaiwaimaro wrote:
What does this have to do with anything that ICANN or NARALO does?
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies",
*The US Congress Tax Freedom Act – Let Me Go, I want to Breathe*
Well it not new that the US has always maintained that the Internet should be a tax free zone as per the *US Congress's Tax Freedom Act 1998* (*authored by Representative Christopher Cox and Senator Ron Wyden and signed into law on October 21 1998 by then President Clinton*) which following expiry continued to be reauthorised and it most recent re-authorisation (legal speak for extension) was in October 2007 where this has been extended till 2014. It is unclear whether there will be another extension post 2014. There is a moratorium on new taxes on e-commerce, and the taxing of internet access via the Tax Freedom Act. Whilst the US Congress's Tax Freedom Act 1998 bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet only taxes such as bit taxes, bandwidth taxes and email taxes, it also bars multiple taxes on e commerce. It does not exempt sales made on the Internet from taxation, as these may be taxed at the same state and local sales tax rate as non Internet sales.
*The US Marketplace Fairness Act – You are strong, you can stand on your feet now*
With the introduction of the *US Marketplace Fairness Act in 2013* in both the Senate and the House of Representatives will make for some interesting discussions and lobbying on the Hill. Whilst the Bill in its current form acknowledges the exemptions that are currently in place – the manner in which discussions play out by the manner in which both Senators and Representatives are having reflect a change in atmospheric pressure – which in my mind is significant.
In 1998 when US Senate voted 96-2 to approve the Tax Freedom Act and the mere fact that the new Bill has 28 Co Sponsors and in the House of Reps, there are 47 co sponsors speak volume.
*To Tax or Not to Tax*
As early as 2000, the problems of tax free e commerce were discussed[1]<#_ftn1>. If e-commerce proceeds untaxed, it would mean that state treasuries would face an eroding tax base. States within the United States of America rely on sales tax for approximately 25-40% of their revenue[2] <#_ftn2>. As such there is a trade-off or opportunity cost as other taxes may have to increase to make up for the deficit caused by tax-free e-commerce.
*Opportunity Cost and Impact on Other Industries*
The deficit caused by tax free e-commerce means that other taxes may be subjected to increase and also potential funding may be siphoned away from other priority areas. Traditional firms or businesses who do no trade electronically are at a disadvantage as they are forced to collect sales tax at the register. This is why it is sometime cheaper to purchase a pair of boots online than if you were to walk into a traditional store.
*Widening the Digital Divide*
One of the issues that was discussed in the E commerce round table meeting was the widening of the digital divide where people without credit cards or Internet access may be forced to shoulder the burden of sales tax[3]<#_ftn3> .
*E Commerce has truly blossomed*
The term ``electronic commerce'' means any transaction conducted over the Internet or through Internet access, comprising the sale, lease, license, offer, or delivery of property, goods, services, or information, whether or not for consideration, and includes the provision of Internet access.
Global business-to-consumer e-commerce sales will pass the 1 trillion euro ($1.25 trillion) mark by 2013, and the total number of Internet users will increase to approximately 3.5 billion from around 2.2 billion at the end of 2011, according to a new report by the Interactive Media in Retail Group (IMRG), a U.K. online retail trade organization[4] <#_ftn4>. The study estimates that business-to-consumer e-commerce sales in 2011 increased to 690 billion euros ($961 billion), an increase of close to 20% from a year earlier[5] <#_ftn5>.
According to that study, the US remains the world’s largest single market as far as e commerce goes. The same study highlighted that with China’s phenomenal growth rates that it is speculated to surpass the United States in this regard shortly.
The US Department of Commerce[6] <#_ftn6> reported that Total Retail Sales from the fourth quarter of 2012 was estimated at *$1,105.8 billion* which is an increase of 4% from the third quarter of the same year.
*ICANN and its Revenue Streams*
The explosive growth of the Internet and domain name registration has led to marked growth of the ICANN budget from revenues of about $6 million and staff of 14 in 2000, to revenues of $90million and a staff of 149 which was forecasted for 2012[7] <#_ftn7>. ICANN is funded primarily through fees paid to ICANN by Registrars and Registry Operators[8] <#_ftn8>. Registrars are companies with which consumers register domain names and these include but are not limited to the likes of GoDaddy, Network Solutions and Google.
Registry Operators are companies and organisations that operate and administer the master database of all domain names registered in each top level domain. For example, .com is operated by Verisign Inc and Neustar Inc. operates .biz .
In 2011, ICANN received 94% of its total revenues from registry and registrar fees. That is Registry Fees contributed 49% and Registrar fees contributed 45% from registrar fees[9] <#_ftn9>.
Without a doubt, the collection of fees from the new gTLD program could contribute to an unprecedented level of revenue for ICANN. It has been estimated that ICANN will generate revenue of $337million from the new gTLD application fees, which is twice the amount of traditional revenues from all other sources over the next couple of years. ICANN estimates[10]<#_ftn10>that there will be a surplus of $27.8 million after operating expenses (OPEX) is met.
*List of Interesting Links*
· Internet Retail Taxation in the United States - http://www.cj.com/internet-tax [To see State and Legislative Activity]
· US Internet Taxation - http://minnesotaattorney.com/internet-taxation/ [Note: material is old and needs revision but it is helpful to see the types of taxes]
· Advisory Commission on Electronic Commerce - http://govinfo.library.unt.edu/ecommerce/ITFA.htm
* *
------------------------------
[1] <#_ftnref1> 1st E-commerce Roundtable Meeting was held in Washington DC, 12-2 PM on April 13, 2000
[2] <#_ftnref2> ibid
[3] <#_ftnref3> ibid
[4] <#_ftnref4> See: http://www.internetretailer.com/2012/06/14/global-e-commerce-sales-will-top-...
[5] <#_ftnref5> ibid
[6] <#_ftnref6> http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
[7] <#_ftnref7> ICANN, FY13 Operating Plan and Budget, June 24, 2012, available at http://www.icann.org/en/about/financials.
[8] <#_ftnref8> The list of ICANN-accredited registrars is available at http://www.icann.org/en/registries/agreements.htm.
[9] <#_ftnref9> ICANN Financials Dashboard, updated June 15, 2011, available at https://charts.icann.org/public/index-finance-fy11.html.
[10] <#_ftnref10> ICANN, FY13 Operating Plan and Budget, June 24, 2012, p. 61, available at http://www.icann.org/en/news/announcements/announcement-13jul12-en.htm.
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly
participants (3)
-
Avri Doria -
John R. Levine -
Salanieta T. Tamanikaiwaimaro