Academic journal article Journal of Accountancy

Business Group Addresses Online Nexus

Academic journal article Journal of Accountancy

Business Group Addresses Online Nexus

Article excerpt

A customer in Illinois orders a computer game from a company in Maine through the company's Web site by e-mailing a credit card number. The company sends the game program over the Internet. The Internet service provider (ISP) has a "presence" in Illinois consisting of a small room with a computer but no permanent personnel. Which state gets to collect tax? The company doesn't even know where the customer lives. The issue is "nexus," and it's causing confusion for customers, businesses and Internet service providers, as each state approaches the problem differently.

The Interactive Services Association (ISA) is attempting to address the problem and establish consistency, at least from the point of view of companies doing business over the Internet. Founded in 1981, it's an organization representing about 350 companies involved in delivering interactive services, including many major online and Internet companies. A task force of member companies recently published a white paper exploring taxation of goods and services and technological problems and solutions. "While nobody likes additional taxes, if states are going to impose taxes on online and Internet services, we want to make sure they take time to understand the nature of the Internet and the problems associated with taxing it," Sara Fitzgerald, ISA's director of member services, told the Journal. "We believe that if states impose transaction taxes, they should be attributed to the billing address." The white paper concludes that states should

* Adopt uniform definitions among themselves.

* Establish a single rate, within each state, of any applicable tax. …

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