TUCoPS :: Cyber Law :: bbs_tax.txt

Plans in NY to tax BBS info transfers

Subj:The Tax Man Cometh...
Date:10 Sep 91  01:04 am
City:Sanford NC        

This is from ZiffNet NewsBytes on Compuserve, watch out Sysops, this 
could spread...
NEW YORK, U.S.A., 1991 AUG 9 (NB) -- New York State bulletin board  
system operators (sysops) have banded together to attempt to roll   
back legislation that imposes a requirement on sysops to collect New
York State sales tax on software downloaded by users of their systems.                                                       
The legislation, enacted as part of the New York state budget       
agreement (Senate bill #6079, Assembly #8491), went into effect on  
September 1st and, according to the understanding of an organization
of New York sysops (NYBBS), requires sysops to remit to New York    
State sales tax on any software downloaded. It is the understanding 
of this group that the tax requirement includes not only commercial 
software but also "shareware" and public domain software (in the    
case of public domain software, the sysop is required to estimate   
the "value" of the software and then remit applicable tax). The tax 
remission requirement is said to be in effect for the sysop whether 
or not the downloader ever pays for the software.                   
Tony Mack, a sysop in the Albany area, told Newsbytes that 31 sysops
met on Saturday, September 7th with legislators, attempting to reach
agreement on modifications. Mack said that the legislators,         
Assemblyman Paul Tonko (D - 105th Dist) and James Tedisco (R -      
107th), told the group that they believed that exemptions could be  
made for BBSs that did not accept donations of any type and imposed 
no restrictions on downloading such as "upload/download ratios" or  
membership requirements.                                            
Mack said that the compromise was unacceptable and pointed to the   
fact that many BBS accept donations simply to pay for Usenet charges
and equipment upgrades. Jack Brooks, sysop of New York City's Dorsai
Embassy, agreed with Mack, telling Newsbytes, "Dorsai charges users 
of our Usenet interface $25 a year. This charge is an attempt to    
offset our monthly payments for the Usenet feed and, quite frankly, 
it doesn't cover it so we still have to make it up from our own     
pockets.  This law is absurd and must be repealed."                  
Brooks said that Dorsai has issued a public statement on the issue  
and is asking its users to bring appropriate political action to    
repeal the regulation. The statement says, in part, "It is the      
policy of The Dorsai Diplomatic Mission to oppose any and all       
legislation that would diminish and hamper the goals, continued     
operation and successes of the telecommunications community at      
large.  Such an act is New York State Senate Bill #6078 and Assembly 
Bill #8491 sections 154, 155, 156, and 157. These statues would     
destroy the free exchange of information, ideas, and public domain  
software guaranteed by the Constitution."                           
The BBS of the New York Amateur Computer Club (NYACC) also responded
to the regulation with a message from sysop Hank Kee, saying, in    
part, "This is an ill advised law that muzzles the free flow of     
electronic information. This bill needs to be repealed. If not, I   
will forced to inhibit all file transfer activity on this BBS."     
NYACC distributes, through its BBS, the PC Blue Library, a          
multi-hundred volume library of MS-DOS public domain and shareware  
Mike Godwin, in-house counsel of the Electronic Frontier Foundation, 
told Newsbytes that Kee's notification that file transfer activities 
may be terminated is an example of the effect that the tax requirement
will have. Godwin said, "I think that this kind of ill-conceived law 
is very likely to impose a chilling effect on the exercise of the 
rights of BBS users to communicate and share free software."                                                
Godwin continued, "It's as if you had to charge a sales tax whenever
a neighbor brings a cup of sugar to someone's door. We (EFF) strongly 
recommend that the officials responsible for both this law and its 
interpretation reconsider this action."                     
Officials at GEnie and CompuServe were unavailable for comment on how 
the legislation might impact their services within New York State.                                                    
(Barbara E. McMullen & John F. McMullen//19910909)             

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