Yesterday, the Colorado House of Representatives signed off on a package of tax hikes that included applying the state’s sales tax to all internet transactions and software purchases. It was a brisk start to the legislative year, where a single committee hearing was held on the tax measures only a few days prior.

Here we go again!  Colorado has officially became the first state this year push a bill to collect taxes on all internet purchases.  Yesterday, the House Finance Committee considered "affiliate nexus tax" legislation in a hearing amongst a number of other tax proposals.  The measure would require out-of-state online retailers with no physical presence in the state to collect taxes on Colorado residents.

While the bill is a tax increase on consumers and a significant burden on online businesses (and interstate commerce), it also will likely fail to raise revenue.  Last year, when the bill passed in Rhode Island, the tax was estimated to raise no additional tax revenue and this has been confirmed by the Department of Revenue.  In fact, there was even a bill introduced in Rhode Island this year (House Bill 7071) that would repeal the tax.

Unlike other nexus tax bills, however, Colorado's House Bill 1193 goes one disturbing step further to allow the Department of Revenue to issue subpoenas to any out-of-state business that would require them to provide personal information about their Colorado customers.  Who doesn't love sharing their personal information including possibly credit card numbers and purchase details with the government?  Presumably, it would allow the state to come after residents to collect "use tax" on the products.  Even worse, if a business doesn't provide the information and chooses to protect the proprietary information of their customers, they can be held in contempt.  It also would apply regardless of the fact that the same internet tax bill is currently being challenged as unconstitutional in New York.

Similar bills have also been introduced in New Mexico, Virginia, and Mississippi this year.  No matter where you live, click here to write your state legislature now and oppose taxes on internet commerce.

StopeTaxes.com wishes the Internet a very happy 40th birthday! 

What started in a lab in UCLA in 1969 has transformed human civilization. The internet has changed the way we work, learn, communicate, conduct commerce, and live. One of the most significant developments in human history, it has facilitated tremondous prosperity, innovation, and is bringing change to even the most closed, cruel, and opaque regimes in the world. 

StopeTaxes.com is committed to preserving liberty online. Indeed, the internet is the last best example of a truly free market. However, efforts are afoot that will hinder all that has made the internet a boon to the economy and humanity.

Whether it's "Net Neutrality" in Washington or proposals to tax internet access and e-commerce in the states, the internet and online community are under assault.

StopeTaxes.com is here to combat and educate the public about these nefarious efforts. Join us in this crucial fight for freedom online and stay tuned to StopeTaxes.com for latest information.

Lawmakers and Department of Revenue officials in Alabama have begun searching for ways to force out-of-state internet retailers to collect and remit sales tax revenue, including joining the Streamlined Sales Tax Project (SSTP).  SSTP is a small cartel of state lawmakers and tax administrators who write tax laws behind closed doors for states across the country.

SSTP is attempting to require out-of-state retailers to become tax collectors for states.  Currently, the dormant commerce clause of the U.S. Constitution prevents such action as a burden on interstate commerce.  Nevertheless, over 20 states across the country have given their authority to write tax laws to SSTP.  As the Alabama Press-Register reports:

"We're hearing a lot of that momentum developing across the country," said Alabama Revenue Commissioner Tim Russell. "Why should one escape sales tax and the others not?"

What the Revenue Commissioner ignores is that, under current law, no one can legally escape paying sales tax on out of state purchases.  Alabama law requires consumers to remit what is called "Use Tax" on purchases made outside of the state.  Already, three-quarters of Alabamians remit such tax to the Dept. of Revenue.

However, use tax has not stopped policymakers across the country from attempting to force retailers to collect the tax instead of consumers.  For a given online retailer, this means keeping track of the over 8,000 sales tax jurisdictions across the country - a significant burden on both business and interstate commerce.

CLICK HERE to write your lawmaker in opposition to SSTP and other unconstitutional forms of internet taxation.

(photo by Indhslf72)

While state legislatures have largely completed their budgets and closed up shop for 2009, the push in some states for taxing the internet continues unabated.

Lawmakers in the North Carolina General Assembly voted on Wednesday to approve a state budget that includes both an affiliate nexus etax and a new tax on digital goods.

While the state estimates the new etaxes will generate a combined $36 million - out of nearly $1 billion in higher taxes included in the budget - retailers have already ended programs to collect what is likely an unconstitutional tax.  The Amazon Tax requires out-of-state retailers with no nexus in North Carolina to collect and remit taxes to the state when consumers arrive from a click-through advertisement on a website based in North Carolina.

The tax was included despite strong opposition from in-state advertisers who will directly lose business from retailers ending advertising contracts to avoid collecting the unconstitutional tax.  Similar measures were vetoed in Hawaii and California last month for this very reason.

The budget was produced by a Senate and House conference committee on Tuesday and rapidly approved by the legislature on Wednesday.  While the Democrat controlled General Assembly and Governor Perdue (D) negotiated for weeks on various tax hikes to be included, the eTaxes were consistently left on the table.

North Carolina joins New York and Rhode Island in establishing an Amazon eTax and 18 other states that tax digital goods.

On Thursday, the Canada Revenue Agency (CRA) announced that sales made online are now taxable.  While the ruling applies to all online retailers, the CRA will begin enforcing the law by discriminating primarily against eBay sellers.  Revenue Canada will be forcing eBay to turn over sales records to audit Canadian sellers by the end of summer.

While many states are planning to return for special legislative sessions later this year, below is a quick recap of eTax efforts around the country so far.

Amazon eTax: The tax was passed in Rhode Island last month, making it the second state behind New York to adopt the law.  It was either rejected by the legislature or vetoed by the Governor this year in Hawaii, California, Minnesota, Tennessee, and Connecticut.

Digital Goods Tax: eTaxes on downloads were passed in Wisconsin, Washington, Mississippi, Kentucky, and Vermont this year.  These states join 6 others that have imposed the tax legislatively since 2007 and 7 others that have unilaterally imposed it through tax administrators with little or no legislative oversight.

Despite the 18 states that tax digital goods, digital goods proposals were rejected this year in Florida, Massachusetts, Minnesota, Nevada, New York, Virginia, West Virginia, and Wyoming.

Last week, the Governors of Hawaii and California vetoed Amazon eTax bills that would unconstitutionally force out-of-state online retailers to become tax collectors.  In vetoing the bills, the governors argued they were net tax increases and violated the interstate commerce clause.  Additionally, the governors noted that online retailers would terminate contracts with in-state advertisers, as the legislation assumed these business affiliations provided a strong enough "nexus" in the state to force retailers to collect the tax.  By simply severing this connection, retailers would no longer be forced to collect the tax.

However, Rhode Island lawmakers and the Division of Taxation failed to get the hint.  After retailers sent letters to their advertisers and to legislators in Rhode Island stating they would be ending advertising agreements to avoid the unconstitutional law, lawmakers and Gov. Carcieri passed the tax hike as part of the budget anyway.  Then, as if completely unaware of what had just happened, the state's tax collectors showed up late to the party and sent a notice to "a list of the top 100 internet retailers" explaining that they now need to collect the tax.  This comes despite the fact that under current law, the Division of Taxation is in charge of collecting tax directly from consumers on purchases made out of state.

Thanks for the courtesy note, Rhode Island Division of Taxation, but the retailers already decided not to do your job for you.

Did policymakers in Rhode Island and the Division of Taxation not get the hint that passing a law in clear violation of the U.S. Constitution and current Supreme Court jurisprudence would cause their own in-state advertisers to lose business?  Not only could they have looked to their counterparts in California and Hawaii, but lawmakers in Rhode Island were also informed through press and otherwise that termination of these contracts would occur if the law was passed.

Hawaii and California based advertisers have kept their business thanks to these vetoes, while Rhode Island policymakers simultaneously passed an unconstitutional law and caused in-state companies to lose business.  Let this contrast between states be a lesson for other lawmakers around the country.

As North Carolina's budget remains stalled in the legislature, proposed tax hikes on internet transactions are taking on heat.

Most notably, the budget includes an "affiliate nexus" etax, which requires out-of-state retailers to collect taxes on North Carolina consumers.  The tax flies in the face of the U.S. Supreme Court's decision in Quill v. North Dakota, which determined that such a tax violates the interstate commerce clause of the U.S. Constitution.  As a result, the proposed tax hike has caused online retailers to fire back against the legislature, noting the unconstitutionality of such a tax collection scheme.

The budget also would apply the sales tax to digital goods purchased online, such as music, movies, ringtones, and films.  Together with the nexus tax, these provisions constitute a $31 million tax hike on North Carolinians.

Meanwhile, negotiations between the House and Senate budget writers have broken down and this week legislators are expected to pass "continuing resolutions" to keep state government operating.  A conference committee is poised to work out the budget differences in the coming weeks.  All told, the budget contains nearly $2 billion in tax and fee increases.

CLICK HERE NOW to write your state legislator and urge them to oppose etaxes in the North Carolina Budget!

(photo by Mr. T in DC)

An etax on all goods purchased online has been roped into the Rhode Island House Budget and is slated for a vote tomorrow.

The "affiliate nexus tax" was previously under consideration by the House Finance Committee, who also drafts the state budget.  At the time, Stop eTaxes reported that the Committee pegged the tax hike at roughly $100 million.

However, since including the etax in the state budget, the House Finance Committee Budget Report has downgraded the tax hike from $100 million to zero.  This is likely the result of the tax being unconstitutional and thus unenforceable by the state.

In addition to leaving a law inviting costly legal challenge on the state's books, the etax inadvertently punishes in-state advertisers and other businesses.  To circumvent federal interstate commerce law, it expands the definition of doing to business to include an out-of-state retailer that advertises through a Rhode Island based website.  This means retailers could simply end advertising agreements with in-state advertisers to avoid paying the unconstitutional tax.

CLICK HERE NOW to write your Rhode Island legislator in opposition to the etax included in the budget package.

(photo by J. Stephen Conn)

What a difference almost two weeks makes. 13 days ago HB 569, legislation that would have resulted in the nation's first internet access tax, quietly saled through the House by a vote of 82-9. Since that vote ATR and other allies worked hard to educate senators, the public, and the media about the misguided nature and adverse consequence of this legislation.

After a lengthy and spirited debate in today's Louisiana Senate Commerce Committee hearing, HB 569 was deferred by a 5-0 vote, essentially killing the bill in the legislative session's waning days.

This development represents a huge victory for Pelican State taxpayers. Not only were Louisianans spared the threat of the nation's first internet access tax, they avoided further squandering of their taxpayer dollars on what would have been an inevitable legal challenge.  As ATR has repeatedly pointed out throughout this debate, HB 569 ran afoul of the federal Internet Tax Freedom Act, which was reauthorized by Congress in 2007.

With this coming on the heels of this week's defeat a tobacco tax hike in the house, 2009 can be considered, overall, a fairly successful session for Louisiana taxpayers.