tax Technology

California Seeks Amazon Tax (ABX8 8)

Following in the footsteps of New York, California seeks to imposed its own version of the Amazon tax. Specifically, ABX8 8 seeks to amend Section 6203 of the Revenue and Taxation Code, which covers the collection of sales tax in the State of California.

(5) (A) Any retailer entering into an agreement or agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refers potential purchasers of tangible personal property to the retailer, whether by a link or an Internet Web site or otherwise, provided that the total cumulative sales price from all of the retailer’s sales of tangible personal property to purchasers in this state that are referred pursuant to all of those agreements with a person or persons in this state, within the preceding 12 months, is in excess of ten thousand dollars ($10,000).

Here’s the bill analysis:

Expanded sales tax nexus . A contentious issue in sales and use tax administration relates to the extent to which a state may compel an out-of-state retailer to collect use taxes from its in-state customers. The issue is of considerable importance because, although Californians are required to self-report out-of-state purchases for use in this state, the compliance rate is very low.

In general, an out-of-state retailer must have sufficient business presence in the State (also known as “nexus”) in order to be required to collect and remit the tax. Under current law, a retailer is considered “engaged in business in this state” and required to collect the California use tax on sales made to California consumers when it maintains storage or warehousing facilities in the state or it has a representative or independent contractor operating in this state for the purpose of selling, delivering, installing, assembling, or the taking of orders for the tangible personal property.

Current Board of Equalization regulations specify that the use of a computer server on the Internet to create or maintain a web page or site by an out-of-state retailer is not considered a factor in determining whether the retailer has a substantial nexus with California. The regulations further state that an Internet service provider or other Internet access service provider, or World Wide Web hosting services shall not be deemed the agent or representative of any out-of-state retailer as a result of the service provider maintaining or taking orders via a web page or site on a computer server that is physically located in this state.

This bill provides that the term “retailer engaged in business in this state” includes any retailer that enters into an agreement with a California business or other entity under which the California entity, for a commission or other consideration that depends on actual sales, directly or indirectly refers potential customers of tangible personal property to the retailer. The referral can be by a link or anInternet Web site, or some other means, provided that the cumulative sales price from sales by the retailer to customers in California who are referred pursuant to these agreements exceeds $10,000 during the preceding 12 months.

The measure does not apply to advertising on television, radio, in print, on the Internet, or any other medium, unless the payment for advertising consists of a commission or other consideration that is based on sales of tangible personal property. Thus, banners and “click-throughs” on internet sites, such as Google, which are based on models other than sales commissions for referrals, would not create nexus with California. However, the bill could apply to out-of-state sellers using California-based marketplace sites, such as e-Bay.

The bill is based on legislation enacted in the state of New York in 2008. That law has been challenged on Constitutional grounds, but the challenges were dismissed at the trial court level. Currently, three states (New York, North Carolina, and Rhode Island) have enacted laws requiring remote sellers using on-line affiliates to collect use taxes, and lawmakers in several other states have introduced similar legislation.

I’m not sure about the part about Google though since they do have an affiliate network.

criminal law international tax

Offshore Tax Havens

The IRS is conducting an investigation to determine the tax liabilities of US taxpayers who have signature authority over bank accounts at or over American Express, MasterCard, or Visa credit, debit or charge cards issued by banks or other financial institutions in Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Dominica, Gibraltar, Grenada, Guernsey/Sark/Alderney, Hong Kong, Isle of Man, Jersey, Latvia, Liechtenstein, Luxembourg, Malta, Nauru, Netherlands Antilles, Panama, Samoa, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Singapore, Switzerland, Turks and Caicos and Vanuatu.

For this investigation, the IRS has sought account records from PayPal, as well as from MasterCard International and VISA International.

And, how does the IRS go about finding these offshore tax havens? Here’s the money quote:

I have reviewed various offshore/tax haven related Web sites on the Internet. A search of the Internet with any search engine using the key words “offshore” or “tax haven” will produce a very large number of hits.

So, while offshore banks can use websites to market to American taxpayers, the IRS, powered by Google, can also find these same websites and figure out which individuals or institutions may dedicated to helping individuals with significant assets preserve or enhance their wealth with anonymity and ease through offshore bank accounts and credit cards.

intellectual property Technology

Top 10 Ways Not to Sue Google

Mishak v. Google, Inc. et al. is quite a head-scratcher. I found the complaint on the Justia Federal District Court Filings and Dockets website. Unfortunately, the complaint was a scanned and split into three parts. Breaks the flow when you have to hop around. I pieced the complaint together and OCR’d it. Here it is.. (PDF – 15.3MB) The high (or low) lights:

  1. Search Engines. Plaintiff sued a long list of defendants, which allegedly operate various Internet “search engines.” Of course, the Plaintiff sued the big three: Google, Microsoft and Yahoo. What do they say on informercials? But, that’s not all? Plaintiff also sued Excite (which I last used in the 1990s), as well as AltaVista (ditto). Then it got weird. Craigslist? Earthlink?
  2. Banner Ads. “All Defendants … sell advertising space on the [s]earch result pages known as Banner Ads.” Google does banner ads? I haven’t punched the monkey on Google yet. Advertising (of any kind) on Craigslist? Gasp!
  3. Copyright or Trademark. “Plaintiff has a copyright. (Exhibit 1). trademark. [sic]” Exhibit 1 is a certificate of registration with the United States Copyright Office for HTML web pages entitled “I Need a TV.” I thought this was supposed to be a trademark claim.
  4. Weak Trademark. “Plaintiff contends that in utter disregard to [Plaintiff]’s intellectual rights, Defendants have sold ‘keywords’ identical to certain of [Plaintiff]’s trademarsk to various third parties and have deliberately manipulated Defendant’s search engine “results” so that, when consumers use these search engines to find [Plaintiff]’s products and services, the consumers are unwittingly diverted to competitors’ products and services.” So, what exactly is Plaintiff’s trademark? “I Need A TV.” See the problem? Weak trademark with generic terms.
  5. Best Buy Beware. “MISHAK d.b.a. INEEDATV.COM is one of the largest direct-to-consumer retailer of custom order televisions, appliances, and personal property in the United States and on the Internet.” Now I want to see the sales figures to back up that statement!
  6. Money Quote. “The dollar amount of sales in the United States of MISHAK’s televisions, commercial and home appliances products and related services under the MISHAK Marks offered for sale and sold under the MISHAK Marks since the original adoption and use are well in excess of many tens of thousands with reasonable growth projecti ons into the tens of millions of dollars.” Many tens of thousands? Considering that consumers are looking to spend about $1,000 on a television nowadays, that means that Plaintiff sold tens of televisions. One of the largest retailers? Not likely.
  7. Keyword Advertising. “Google et al. refuses … to cease selling other keywords comprised, in whole or in part, of the MISHAK Marks….” Somehow, I don’t think Google is going to ban companies from buying advertisements for the keyword TV even if it is in the Plaintiff’s service mark.
  8. Fill in the Blanks. “For example, Google and the other listed defendants continues to sell to MISHAK’s competitors the keywords ….. Accordingly, if a consumer using Google’s et al.’s search engine types ‘…..’ in the search window, competitors who have purchase ‘…..’ or even just ‘…..’ can still appear at the top or in the margins of the results page.” No, I didn’t redact the search terms above. The blanks exist in the original complaint. Really. Fails to state a claim?
  9. Metatags. In metatag / trademark cases, plaintiffs usually sue the parties who have used plaintiff’s trademarks in their metatags. Plaintiffs usually don’t sue the search engines for returning results based on potentially infringing keywords found within a third parties’ metatags.
  10. More Fill In the Blanks. “The Defendants’ search engines are designed and intended to divert and lure consumers from the websites that they intend to visit – e.g., the MISHAK websites – to other websites owned by competing advertisers such as ‘…..'” Damn fill in the blanks. I really want to know who are the competing advertisers. I’ll have to wait for the amended complaint.
  11. More Fill In the Blanks. “The Defendants’ search engines are designed and intended to divert and lure consumers from the websites that they intend to visit – e.g., the MISHAK websites – to other websites owned by competing advertisers such as ‘…..'” Damn fill in the blanks. I really want to know who are the competing advertisers. I’ll have to wait for the amended complaint.
  12. Alta la Vista, Baby! Exhibit 2 shows search results for the search term “I Need a TV” from January 8-14, 2006. And, Plaintiff finally filed suit on December 20, 2007? What’s up with the two-year delay? Also, the complaint primarily appears to target Google, but the search results are from AltaVista. Actually, Exhibit 2 is split into two parts. The first section shows the sponsored matches (i.e., ads) that appear when someone searches AltaVista for the term “I Need A TV.” Because AltaVista bolds the text in the ads that match the search query, you can see that the only matching word is TV. The next section is the same query “I Need A TV” with the modifier “” This search will return matches for “I Need A TV” at the website AVS Forum is a discussion and review forum for home theater products. So, AltaVista returned results showing the following matching discussion threads: “Need a TV with 2 DVI inputs,” “Does MCE need a TV tuner card to run?” and “Need a tv for family room going over a fireplace.” I think this is the smoking gun. 😉
  13. Missing Home Page. “Plaintiff has been careful, skillful and meticulous in the conduct of their television, home and commercial appliances and related services under the MISHAK Marks. Included herein as Exhibit 3 is a copy of Plaintiff’s Home Page.” I couldn’t find Exhibit 3 in the electronic filing. I really wanted to what the Plaintiff had attached because when I visited the Plaintiff’s website, I saw this:


P.S. I learned this from Guy. Call it a Top 10 list even if I have 13 items.


Interview with Tim Stanley of Justia

Tim Stanley, a Google Enterprise Search Superstar, talks about how Justia leveraged the Google Mini to power Justia’s U.S. Supreme Court Center. Tim offers some interesting insight on the power of the Google Mini, as well as Justia’s business plans.