Can Washington Charge Unauthorized Downloaders With Tax Evasion?

from the it-worked-for-al-capone dept

Wed, Jun 3rd 2009 11:30am — Mike Masnick

A bunch of states have been pushing forward with plans to add taxes on digital downloads. The state of Washington apparently passed just such a law, which is scheduled to go into effect on July 26th. Nate sent in a note, pointing out that under a strict reading of the details of the bill you could see how the state could go after unauthorized downloaders as "tax evaders." Now, that may not be the case (and it would be great if we could get someone from the state to clarify), but it seems that what Nate is likely referring to is this explanation in the Q&A about the bill:

What is the value of the digital product for use tax purposes?

The value is the purchase price of the digital product. If the digital product is acquired by means other than a purchase, the value of the digital product is determined by the retail selling price of a similar digital product.

From that, you could easily conclude that anyone in Washington who downloads unauthorized files is now expected to pay a tax based on the "retail selling price" of the files. And, from there, it's not hard to see how failing to pay such a tax, could eventually be seen as tax evasion. How excited do you think that makes the RIAA? Remember, this is the same RIAA that suggested that the feds use copyright infringement laws to arrest drug dealers. You can check out the specific text (in Section 304) within the full bill (pdf file), which is basically the same as what's written above.

The feds eventually went after Al Capone on tax evasion charges. Are file sharers next?

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Filed Under: file sharing, tax evasion, washington state

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A Dan, 3 Jun 2009 @ 11:36am

Free codes
And interesting thought on this: If you reserve or buy some Xbox 360 titles, they give you a code to download an arcade game for free. That arcade game normally costs, say, $5 or $10 online, but you're getting it for free. Based on the wording of the law, you'd have to pay tax on that free game (which the publisher gave you for free to entice you to buy the physical new game). That Q&A answer / section of the bill sounds really problematic.
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Anonymous Coward, 3 Jun 2009 @ 11:37am

Oh noes!

"the value of the digital product is determined by the retail selling price of a similar digital product. "

Mike, you better teach them about value!
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Anshar (profile), 3 Jun 2009 @ 11:41am

Well, I'm not not American, but I see another question here: If a user in WA downloads a copy of openoffice.org, does he or she have to pay a tax on the purchase price of MS-Office?
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ChurchHatesTucker (profile), 3 Jun 2009 @ 11:54am

Hang on.
Isn't this the same as charging sales tax on internet purchases? I see that was brought up in the previous thread, but I didn't see a (good) answer.
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Anonymous Coward, 3 Jun 2009 @ 11:58am

How could this apply to anything that is downloaded from somewhere outside the state of Washington?
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Kazi, 3 Jun 2009 @ 12:00pm

lol ...
All bits are created equal.

Let's sue them for discrimination of data bits as some bits cost more than others (i.e. different services/products) on the same underlying communication technology.

Do you pay for the whole product if the you are missing the last bit of data?

Are they also charging a tax for accessing news services that are behind a paywall? You clearly download data to access those.
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Anonymous Coward, 3 Jun 2009 @ 12:01pm

Re:
Mike the Q&A states that digital products given away for free are exempt.
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Steve, 3 Jun 2009 @ 12:03pm

I'm sorry, but how is it even remotely possible to technologically determine what I am downloading? I can barely keep all of my downloads organized as to what they are, and there are so many misnamed or legitimately fake files for download out there that it seems like an utterly impossible problem to be solved.

Legislating a technological fix for these issues will not work. I already pay the crazy 9.5% sales tax on all downloads. What about streaming files? there are way too many existing and evolving business models out there to ever expect a govt. bureaucracy to be able to price these things out. The concept is so flawed that I almost think the story must have it's facts wrong.
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Ima Fish (profile), 3 Jun 2009 @ 12:09pm

Re: Re:
"Mike the Q&A states that digital products given away for free are exempt."

Not really. Here's what it actually says:

Created solely for the business needs of the person who created the digital good and is not the type of digital good that is offered for sale, such as business email communications.
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btr1701 (profile), 3 Jun 2009 @ 12:09pm

What if it's not for sale?
> The value is the purchase price of the
> digital product. If the digital product
> is acquired by means other than a purchase,
> the value of the digital product is determined
> by the retail selling price of a similar
> digital product.

Personally, the only time I turn to Limewire or some other file-sharing app is when I can't find what I'm looking for for sale on any commercial service.

So if it's not actually for sale anywhere, can the state still expect a tax payment on the unauthorized download?
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Ima Fish (profile), 3 Jun 2009 @ 12:10pm

Re: Re: Re:
Can someone delete my comment above, I did not intend to send it! Darn!
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Ryan, 3 Jun 2009 @ 12:12pm

Now, that may not be the case (and it would be great if we could get someone from the state to clarify)

If I get a good look at a rancid T-Bone steak by sticking my head up a bull's ass, I'm not gonna take the butcher's word for it that it's fresh...
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Mike Masnick (profile), 3 Jun 2009 @ 12:13pm

Re: Re:
Mike the Q&A states that digital products given away for free are exempt.

Yes, with very specific limitations, and it appears to only apply to those given away for free on purpose -- so if you download songs in an authorized way.

The question is what happens to unauthorized downloaders.
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PrometheeFeu (profile), 3 Jun 2009 @ 12:15pm

The RIAA is going to be the first industry ever to be happy they are going to be taxed if pirates can be sought for tax evasion. But I mean, who cares? Illegal downloading is already illegal, so making it also tax evasion isn't really an issue in my mind...

My question concerns artists who donate their music though. The law seems to imply that if a band gives its music away, we have to pay a tax on it. That's really stupid. It's not like you have to pay taxes on watching commercials...
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Dan J. (profile), 3 Jun 2009 @ 12:22pm

Re: Free codes
The Q&A doesn't make it clear but section 606 of the bill itself says:

The provisions of this chapter do not apply in respect to the use of digital products or digital codes obtained by the end user free of charge.

Not sure if that would apply to illegal downloads or not, but it seems like it should cover both the Xbox title and open source software such as Linux or Openoffice.
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Ima Fish (profile), 3 Jun 2009 @ 12:22pm

Mike, you're missing a huge angle to this story. You'd have to pay taxes all free downloads, including open source and music promotional samples! Here are the exceptions to the law:

Digital goods that are not offered for sale are exempt from tax when they are:
* Noncommercial (such as personal email communications).
* Created solely for an internal audience.
* Created solely for the business needs of the person who created the digital good and is not the type of digital good that is offered for sale, such as business email communications. (See section 605 of the digital products bill).

If you're a professional musician, your "free" song is not "noncommercial." It would not be created for an internal audience, unless the artists wanted to put a bunch of hoops fans would have to jump through to get it. And because music is the type of digital good that is offered for sale, the last exception wouldn't apply either.

I think even streaming samples on Amazon would be covered under the "streamed and accessed digital goods" section combined with the section which states that "It does not matter if the purchaser obtains a permanent or nonpermanent right of use."

And how would the courts interpret the law in relation to open source software. Sure, we think that open source software is not commercial, but clearly office suites are commercially available. Would a judge understand the difference? Is there a difference?
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Ryan, 3 Jun 2009 @ 12:24pm

But I mean, who cares? Illegal downloading is already illegal, so making it also tax evasion isn't really an issue in my mind...

That's like saying if you're caught speeding on the highway, you might as well kill the cop since you're already breaking the law. The degree of punishment makes a pretty big difference to most of us.
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zaven (profile), 3 Jun 2009 @ 12:25pm

SO happy I don't live in Washington. How exactly do they plan on enforcing this?
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Anonymous Coward, 3 Jun 2009 @ 12:31pm

Re: Re: Re:
Aren't people uploading the music to a file sharing website giving it away on purpose? Wouldn't the person who you obtained the music from be considered the seller in this instance.

Nowhere did it state that the rights holder of the digital product (ie, record label) had to intend to give it away on purpose, just the seller who would be the average Joe uploading to these websites.
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Dan J. (profile), 3 Jun 2009 @ 12:37pm

Re:
Take a look at the bill itself, particularly section 606. The PDF is available here.
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Dan J. (profile), 3 Jun 2009 @ 12:46pm

Re: Re: Free codes
To correct myself, the Q&A does make this clear. You just have to read down a ways:

Digital products given away for free

There is a use tax exemption for the recipient of digital products given away for free. (See 606). There is also a sales and use tax exemption for the person purchasing digital products, digital codes, or remote access software to give it away for free. The purchaser must provide an exemption certificate. (See sections 503(1)(b) and 603(2) of the digital products bill).

Note that the Q&A talks about products "...given away for free..." but the bill itself actually says "...obtained by the end user free of charge..." The Q&A sounds like it would not apply to illegal downloads, since they arguable weren't "given away" but rather were "stolen." ("Stolen" in quotes because I'm well aware of the difference in copyright infringement and theft but I'm not sure that legal officials would be.) However, a literal reading of the bill makes no such distinction, and I'm not sure how that would play out in court.
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Freedom, 3 Jun 2009 @ 12:51pm

Tax Invasion Opens Doors...
There are two ways that the RIAA and MPAA would directly benefit from this -

1. Bigger stick to come after you with - the whole, we won't tell the various government agencies that we suspect you of illegally acquiring copyrighted materials if you just pay us our $5k go away money.

2. They turn you over to the government agencies in the hope that they'll do the leg work and turn a civil issue into a criminal one. One where maybe they'll be able to raid your home for evidence.

Of course, don't forget when it comes to collecting taxes you start to see preverse logic. Something like, you shared a file on bit-torrent so you are now the seller and responsible for sales tax on the 3,000 downloads we think occured. You are also now a business and don't have a business license so we are charging you with fraud and various penalities and fees.

I can think of no single worse thing to happen to the Internet than a tax on digital goods of any kind. Washington should be the battleground for this and if there are any organizations that are fighting this I would like to know so I can contribute to it.

Remember we elect these clowns and the squeaky well gets the grease - stop rolling over America and stand of against excessive taxation - it doesn't just have to happen.

Freedom
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Anonymous Coward, 3 Jun 2009 @ 12:56pm

What about theft?
I'm no criminal law expert, but is it possible to charge someone who shoplifts with tax evasion since they didn't pay sales tax? I would count this in the same category, even though there's no loss of property. The issue at hand is that there is an illegal "product" receipt (probably bad wording) where the government doesn't receive a due tax. Thoughts on this?
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Ima Fish (profile), 3 Jun 2009 @ 12:56pm

Re: Re:
"Take a look at the bill itself, particularly section 606"

Thanks. Here's the section:

Sec. 606 The provisions of this chapter do not apply in respect to the use of digital products or digital codes obtained by the end user free of charge.

That seems to contradict 304(3)

"Value of the service used" means the purchase price for the digital automated service or other service, the use of which is taxable under this chapter. If the service is received by gift or under conditions wherein the purchase price does not represent the true value thereof, the value of the service used shall be determined as nearly as possible according to the retail selling price at place of use of similar services of like quality and character under rules the department may prescribe

606 seems to say that if you didn't pay for it, it won't be taxed. 304(3), on the other hand, seems to say that if you didn't pay for it, taxes will still be accessed at the "retail price." Mmmm...
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Pjerky (profile), 3 Jun 2009 @ 12:58pm

I think they could abuse this even more.
Another concern I see is that free software that is distributed freely on the internet can have a download tax if other "similar" software is sold somewhere else on the net. Like say blogging software (WordPress, Drupal, etc.) or CMSes or e-commerce suites (OSCommerce, Magento).

What is to stop them from making this kind of leap or even using such a law as a basis for wiretaps or other types of surveillance?

-Pjerky
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stat_insig (profile), 3 Jun 2009 @ 1:00pm

Look at me, feds are arresting me for tax fraud even though I did not commit one. I am Al Capone :-)
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Anonymous Coward, 3 Jun 2009 @ 1:03pm

Re:
That's what I was thinking. You would think this would run afoul of constitutionally granted Congressional control over interstate commerce, and would probably be struck down if challenged.

However, there's precedent. In my home state we have the concept of "usage tax" for as long as I've been filing taxes (15+ years.. my God I'm old). In short this means that when you file your state tax forms, you're supposed to declare the value of anything that you purchased out of state and did not pay sales tax on. The intent is to get everyone to voluntarily pay state sales tax on things they bought outside the state.

I've been told by a CPA that it was specifically created to cover mail-order purchases, and that it would theoretically apply to downloads as well. In reality, there's just no practical way to determine who is being truthful or not, so it's not really possible to go after the use tax offenders. In practice, most people simply enter "0" and most tax preparers or accountants don't even ask you about it, so it's really a useless gesture.
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vastrightwing, 3 Jun 2009 @ 1:09pm

You now owe a tax
I am charging $0.99 for this message. If you download it, the retail price is $0.99 and if you obtain it without paying me for it, you still owe me $0.99 and any sales tax associated with the sale.

Thank you for the download.
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Someantimalwareguy, 3 Jun 2009 @ 1:17pm

Re:
"My question concerns artists who donate their music though. The law seems to imply that if a band gives its music away, we have to pay a tax on it. That's really stupid. It's not like you have to pay taxes on watching commercials..."

The thing to keep in mind here is the intent and purpose of the item given. Think of this like winning a prize on a game show. The winner is still responcible for paying tax on the value of the prize...

Why should digital goods be any different?

Like those that donate prizes to be given away on game shows, those giving away free content do it for marketing purposes. So taxing the good is not the real question here...
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TripleDub, 3 Jun 2009 @ 1:21pm

How about subscriptions
So if I am playing an MMO that does not collect WA sales tax, Most of them do btw, Am I a tax evader? I have to download content to play.
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Eponymous Coward, AKA Doug (profile), 3 Jun 2009 @ 1:25pm

What's next?
The Pirate Bay guys extradited and forced to stand trial under the RICOH act?

The bad guys in Gotham had this same problem once. Their solution, and the solution I advocate - hire the Joker to burn the world down.
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Anonymous Coward, 3 Jun 2009 @ 1:28pm

Re: Re: Re: Free codes
So how is "obtained by the end user free of charge" different from "acquired by means other than a purchase"? Does that mean you are only exempt from the tax if the free item is given to you when you purchase something else?
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Eponymous Coward, AKA Doug (profile), 3 Jun 2009 @ 1:29pm

Re: You now owe a tax
Sadly, you do not get to keep that tax, as it will be turned over immediately to the government. the government has noted that you are collecting monies under the auspices of it being a sales tax, and they expect to receive their payment. Now, if you fail to compensate the government the appropriate amount, you are liable for not paying your sales tax, and face fines and penalties. Plus, you get to hire an accountant to prepare and file all the needed forms associated with your business.

It's Faust 3.0, and only the government wins.
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Anonymous Coward, 3 Jun 2009 @ 1:30pm

Re: You now owe a tax
$.99? Psshhaw.

I'm charging $100 million. I'll include the millions in tax evasion in my lawsuit or you can settle with me for just $100.

Is that called extortion or blackmail?
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Anonymous Coward, 3 Jun 2009 @ 1:30pm

What is remote access software (RAS)?

RAS is prewritten software provided remotely. In other words, the buyer pays the seller for the right to access and use the software, which resides on the seller’s server or the server of a third party. (An Application Service Provider is an example of a business that may provide RAS.) (See section 301(6)(b) of the digital goods bill). Before the effective date of the digital goods bill, income derived from providing RAS was subject to business and occupation (B&O) tax under the Service & Other Activities classification. Effective July 26, 2009, the sale of RAS is classified as a retail sale for B&O tax purposes and is subject to sales or use tax. The purchase of prewritten software is exempt if the purchaser uses the software to provides RAS. (See section 302(2)(f) of the digital products bill).

Does this mean they can charge a tax on online game subscriptions? As in, will a WoW subscription be raised to $16.43 for WA residents?
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Anonymous Coward, 3 Jun 2009 @ 1:31pm

Re: Re: Re:
It almost seems like if you receive it as a gift that you must may tax regardless of whether the person who gifted to you already paid tax on it?
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Anshar (profile), 3 Jun 2009 @ 1:33pm

Re: Re: Re: Re: Free codes
Could a download of an intentionally free product be considered a purchase for $0.00?
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Dan J. (profile), 3 Jun 2009 @ 1:39pm

Re: Re: Re:
IANAL but it sounds to me that if I purchase a product and give it to you, you must pay taxes on the purchase price but if the product was originally free, there is no tax. I wonder if this is intended to thwart you sending your out of state buddy the money, having him download the file and send it to you.
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Anonymous Coward, 3 Jun 2009 @ 1:47pm

Re:
"Digital goods that are not offered for sale are exempt from tax when they are:"

A strict reading of this would mean that if one downloaded OpenSuSE Linux then one would owe the tax on the sale price of an equivalent box set of SuSE as SuSE contains OpenSuSE.
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TripleDub (profile), 3 Jun 2009 @ 2:03pm

Re:
Blizzard already charges WA sales tax.
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hegemon13, 3 Jun 2009 @ 2:42pm

Re: Re:
Because an infinite, digital good has no place in an old model designed around the transfer and allocation of scarce goods. And, the monetary value of an infinite item that is available for free to everyone in unlimited quantities is...zero.
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mike42 (profile), 3 Jun 2009 @ 2:44pm

Conspiracy Theory
Isn't it odd that several major tech companies are headquartered in Washington, and yet this bill went through?

I'm thinking about Microsoft specifically, but Blizzard certainly merits mention...
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minijedimaster (profile), 3 Jun 2009 @ 2:45pm

One word: Unenforceable
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Adam, 3 Jun 2009 @ 2:58pm

Re: How about subscriptions
I live in WA. Online vendors (including MMOs) will be forced to charge the tax or not allowed to sell their product to WA residents.
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Adam, 3 Jun 2009 @ 3:06pm

I live in WA
I live in WA, originally the purpose of the tax was to boost State sales tax revenue because of a very noticeable decline in revenue by sales tax collected from local sales. It was "assumed" that online purchases were responsible.

While stretching it to hit P2P, freeware/open-source, and free SAAS is possible, and would suck, WA is pretty lazy about this sort of thing. Tax revenue collected from this wouldn't even come close to covering the cost for law-enforcement and lawyers. WA is broke, they won't money to make less money.
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Patrick, 3 Jun 2009 @ 3:13pm

Purchased Product
So if I purchased a product in a phsyical format, but choose to download a digital copy as a backup? Do I get taxed twice for the same item?
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Patrick, 3 Jun 2009 @ 3:18pm

Who determines what a "similar digital product" is?
So if I download a movie illegally, who determines the price of a similar product. Can you choose a freely available dvd iso? How about a freely destributed album? Free Ebook? Free game?

Couldn't anyone say that a similar free product is 500X more expensive than it really is?
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Noble, 3 Jun 2009 @ 3:24pm

Not going to work.
That can be struck down as far too broad. For instance, if I download Gimp, it's free. However, you can interpret this clause to mean that I should have to pay taxes on the price of, say, a copy of Photoshop Elements or similar software. Sorry, but this will not stand the test of the courts.
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Zero, 3 Jun 2009 @ 3:32pm

Multiple Downloads of the Same Product?
What if I download a game over Steam, delete it and redownload it? Do I owe the tax twice? Even though I didn't pay for the second download I still received something of value equivalent to the first, right?
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Lonny Eachus, 3 Jun 2009 @ 3:40pm

Same old
This thing reads like the federal tax code. What a mess.

Meh. There are too many exceptions (which amount to subsidies), etc. Further, there is no authority of law here to REQUIRE anybody to charge use tax. Only for recipients to pay it... which has existed for years.

The thing to be concerned about here is: how to they plan to enforce it? There is nothing in the Constitution that allows State A to force someone in State B to collect or pay State A taxes. State A can only exhort its own citizens to pay the tax... and there is no good way to enforce that, because there is no way for it to demand records from those out-of-state companies. There are only 2 ways to enforce this: the "honor system", and intrusion. The intrusion would have to take the form of eavesdropping on transactions (totally unacceptable), or somehow forcing out-of-state businesses to "voluntarily" turn over their customer records (also unacceptable).

This problem has existed for a couple of hundred years, and I refuse to believe that it is a much large percentage of the economy than it has ever been! Ever heard of Sears & Roebuck? Montgomery Ward? And others of course. Mail order was a huge part of the economy 150 years ago.
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dd, 3 Jun 2009 @ 3:43pm

Re: Free codes
The difference there is that the free title would be an authorized download. So as stated, it shouldn't be taxed.
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Anonymous Coward, 3 Jun 2009 @ 4:18pm

Re: Re:
This is exactly how it is in Washington. Technically, all the stuff I bought when I lived next to Portland should've been taxed. Then again, I was paying their taxes and not getting any benefits, so it's a wash.
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la77yt (profile), 3 Jun 2009 @ 4:27pm

email
Each email you read is taxed at first class postage rates? Good luck, WA.
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Anonymous Coward, 3 Jun 2009 @ 4:47pm

It is another hammer for the RIAA to hit you with. Now, how does that storage capability of all the songs in the world ever look now?

Hahahahaha.
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refe, 3 Jun 2009 @ 7:39pm

This will help the industry?
I don't know how useful this tax will be in prosecuting file-sharers, but I can definitely see how it will be useful in further discouraging non file-sharers from purchasing music....
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pogo, 3 Jun 2009 @ 9:25pm

_digital_ download?
So... as long as I restrict myself to analog downloads, I'm fine?
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Dan, 3 Jun 2009 @ 10:22pm

Re:
Last one out of WA. turn off the lights. It is now confirmed it's all downhill from here.
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True Believer, 3 Jun 2009 @ 11:15pm

Only in the Mind of Obama
Our new president wants to give health insurance 47 million who go without, by taxing yours and mine. Oh, sure, that's cost containment.

So why not tax content, especially that obtained under questionable circumstances?

What better way to unite the Patriot Act, the RIAA, the PMRC (Al Gore has to find a way back...), the PTA (homework!), AARP (pro-bandwidth-capping), the content providers, cable and telephone companies, the Heritage Foundation (DL = porn), La Raza (street vendors will still be able to sell bootlegs, so they're not affected...) - and raise "much needed revenues" at the same time!

Its a total win-win!

Especially when Hilary Rosen becomes the next Supreme Court appointee!
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Anonymous Coward, 4 Jun 2009 @ 1:21am

Bad summary?
If I am not mistaken, this changes a couple things.

Before: Whether download or a subscription, if it was storable onto your drive, subject to sales tax.

What will be: Whether it is stored, or streamed, or simply a service like EQ, WoW, etc., subject to tax.

There is something else too, but I can't mention it until I contact my DoR to double check on it.
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Anonymous Coward, 4 Jun 2009 @ 2:23am

So what will be the tax on one downloaded song @ $150 000(RIAA) a pop?
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Anonymous Coward, 4 Jun 2009 @ 3:29am

Double Jeopardy
I believe the issue here is a case of double jeopardy.

Over 10 years ago, Washington State (and other states) used this sort of logic in prosecuting marijuana by creating a "tax stamp". Anyone caught was charged with tax evasion in addition to whatever drug laws had been broken. The law was eventually overturned by the fact that you could not tax something that was itself illegal. No one (other than stamp collectors) was ever known to have bought them.

While taxing LEGAL digital downloads is certainly within the realm of this law, taxing something that is not falls into this same issue, at least in Washington.

IANAL, YMMV.
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Anonymous Coward, 4 Jun 2009 @ 4:03am

Re: Double Jeopardy
Actually, it leads to the funny position that someone caught and charged when downloading music could get off by arguing that downloading was illegal.

Now there would be a nice car of worms opened!
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jf, 4 Jun 2009 @ 5:14am

boo
While I agree people have the right to protect their intellectual property, I don't think this is the correct method. This is how the US got federal level drug laws without the authority to do so, well its how it started anyways.
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Nick, 4 Jun 2009 @ 5:29am

How about applying the same logic for services? For example, if you have sex with your girlfriend, you would have to pay the tax and the value of the service would be determined by the retail selling price of a similar service. :)
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Anonymous Coward, 4 Jun 2009 @ 5:37am

Re:
Seems to me they have the right sense of value (vs price), they're just setting it in an economically-unrealistic way.
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Anonymous Coward, 4 Jun 2009 @ 5:39am

Re: Re: Re: Re:
In short: shouldn't the First Sale doctrine protect the 'buyers' of illicit downloads, bringing us back to the "it's only dangerous to upload" situation?
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Anonymous Coward, 4 Jun 2009 @ 5:43am

Re: What if it's not for sale?
All songs cost $0.99. Except when they cost $1.29. Calculate taxes accordingly.
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Anonymous Coward, 4 Jun 2009 @ 5:46am

Re:
Strictly speaking, downloading isn't illegal yet. if we're talking about copyright infringment, which we are, it's the copier/distributor who's infringing on the rightholder's distribution rights. That means that it's the uploader, not the downloader, who's in hot water. This is why the RIAA finds people by trying to download from them. No one has been taken to court for downloading music.
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Anonymous Coward, 4 Jun 2009 @ 5:51am

Re: Re:
Is SuSE == OpenSuSE? I mean, there's nothing extra or ommitted in either one? Otherwise, why not just assess taxes based on MS Windows? They're both OSes, right?
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chuck, 4 Jun 2009 @ 6:01am

Scary
I just read the law pdf. I would guess the worst part of this
would be for services like 'mozy' or 'IDISK' or any other remote network file system. There are no exemptions for any type of private or public off site file storage systems. Anytime you pull a file from a networked disk - you technically have to pay the tax all over again for it.

Once again, people with no clue about how technology works mucking up the system.
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Ashman, 4 Jun 2009 @ 7:36am

This makes me laugh
This makes me laugh and actually reminds me of an 80's movie where a paper boy chases this guy threw out the entire movie screaming I want my 2 dollars. This is roughly the same thing. Is it really worth pissing away thousands of dollars in a suit against a downloader when in reality the taxes on what they downloaded is probably at most $100.00? Let's look at music. How many songs or cd's would one have to download to generate 100 dollars in taxes? Now what would it cost to go after that person for the 100.00 in Tax money not to mention what would it cost to prove they actually did download it and it was illegal? This sounds like some more stupid RIAA/MPAA BS. What a joke!
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Anonymous Coward, 4 Jun 2009 @ 8:37am

Re: What about theft?
sure it is possible. Even prostites have to fill tax report
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Keith, 4 Jun 2009 @ 9:13am

copyright law
I didn't read all the comment, but it really looks like this is being missed. THERE IS NO SUCH THING AS ILLEGAL DOWNLOADING!!! Just because you agree with any argument made by the RIAA and MPAA doesn't suddenly make it the law. I can't find the case, but this was affirmed by the supreme court (involving a guy that was producing bootlegs of Elvis song on vinyl). The person that provides the copy without authorization is liable for copyright infringement. People get busted for P2P because they also upload. If you are only downloading, it is legal (though the person providing it is INFRINGING).

The industry is constantly trying to reshape the debate, then turn around and use the perspective they created to point out loopholes in the system where the law doesn't live up to the way THEY imagine it.

This bill reeks so bad I can hardly breathe, but rather than leaving a treatise on copyright infringement (there are plenty of good ones out there already), I will end with a quote from Thomas Jefferson WHO HELPED WRITE OUR EARLY "COPYRIGHT" LAW.

"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me."
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Anonymous Coward, 4 Jun 2009 @ 9:14am

Couldn't we just put our servers in a state that has no sales tax?

Tell you what, I will happily pay tax for every good song I download if I can get a tax break for the dollar amount I have spent on every garbage song and album that I have purchased.
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Anonymous Coward, 4 Jun 2009 @ 10:35am

"Actually, it leads to the funny position that someone caught and charged when downloading music could get off by arguing that downloading was illegal."

Going into court and fighting your 75 mph speeding ticket with the defense that you were going at least 100MPH wouldn't be a good idea.
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Sell Digital Products Google, 4 Jun 2009 @ 11:30am

nah
This seems silly. Of course people who avoid paying for digital products inadvertently skip on the tax. I dont see what they can do with a law like this. Maybe they are trying to pave the way for future sales taxes on markets like itunes.
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1DandyTroll, 4 Jun 2009 @ 2:40pm

I guess the old
soviet communists are really confused now, over how simple it was to crack the American nut.

Anyways, since the US already have gone extreme socialism in the controll apparatus department, why not with taxation?

After all, they did say: be all that you can be!
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Rev Spaminator, 4 Jun 2009 @ 2:52pm

Read the Wa Dept of Rev Q&A
One of the links in the story is The Washington State Department of Revenue's Q&A about this new law. They won't mislead about something like this.

This looks like it is only meant to collect the tax when money changes hands for some kind of digital good or service. If it is poorly written, it will probably get challenged in the courts and/or amended in the next legislative session.

Maybe Tim Eyman can start another one of his reckless initiatives.
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Z, 9 Jun 2009 @ 1:01pm

This TAX and spend idea has gone too far;
It's like we're in the medieval ages
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ted, 18 Nov 2009 @ 12:20pm

taxes on internet peurchases
States can't tax internet purchases between two states, can they? What are the laws on that? How would free trials work? How would they know? Could you use proxies to avoid "purchasing" as yourself? Or remote access software which could possibly allow you to make purchases from a computer in a different place?
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