E-commerce

Too many tax-payer funded technologies are being taken by China or other countries, Sen. Jim Webb, D-Va., says, and on Friday he reintroduced a bill to stop the flow.

In order to operate in China, for example, American companies are often forced to hand over their intellectual property and proprietary. Many of those technologies are developed using taxpayer money through grant, loans, or other incentives, Webb said in a statement.

"If taxpayers supported the development of the technology, they own a piece of it and it can't just be given away," Webb said. "Federal dollars that go toward R&D funding, loan guarantees, and public-private partnerships in order to help develop the next generation of technologies here are supposed to be making American businesses competitive and generate American jobs -- not to help develop other industries, such as those in China."

Webb's bill would prohibit companies from transferring technology to countries that require such transfers as a cost of doing business.

"The transfer of publicly supported proprietary technologies by American firms to China -- and potentially other countries -- clearly and unequivocally places the competitive advantage of the American economy at risk," Webb said.

Senate Majority Whip Dick Durbin, D-Ill., says he's working with other supporters to attract more Republican co-sponsors for legislation that would require online retailers to collect sales taxes in states where they have no store or other facility.

Durbin told Tech Daily Dose Wednesday that he would like to see more GOP backers for the bill to help attract the 60 votes needed on the Senate floor to overcome a likely filibuster of the legislation. Durbin is the lead Democratic co-sponsor of the legislation offered with Sens. Mike Enzi, R-Wyo., and Lamar Alexander, R-Tenn.

The bill aims to close a loophole left by a 1992 Supreme Court decision that found states cannot require retailers to collect sales taxes from customers in states where the companies do not have a physical presence. At the time, the case applied to catalog retailers but has since been exploited by Internet retailers.

"We're trying to get some more Republican cosponsors and when we reach the critical number that I think gives us assurance of passage, we'll bring this up in the Senate," Durbin said. When asked what that critical number is, he said he would like to have "perhaps" 10 Republicans sign on in support of the bill. So far, the bill has five Republican and seven Democratic co-sponsors.

The Enzi-Durbin-Alexander bill would authorize states to require Internet retailers to collect out-of--state sales taxes as long as the states either sign on to a tax-simplification project or comply with tax-simplification principles in the bill. Supporters note that the legislation does not introduce a new tax but instead makes it easier for states to collect sales taxes that are already owed.

Still, the bill will likely require consumers to pay more for some products or services they buy online. When asked if this is a difficult sell in an election year, Durbin said the bill "does make it clear that it's no new tax obligation."

The measure is supported by a growing list of companies that sell goods and services, including Amazon, which came out in support of the measure late last year despite fighting individual state efforts to address the issue.

Perhaps in an effort to help Durbin and other congressional supporters attract more backing for the bill, a large coalition of companies and groups wrote Senate Finance Chairman Max Baucus, D-Mont., on Tuesday to urge his support. The bill has been referred to his committee.

The bill "would level the playing field between brick-and-mortar and e-commerce retail businesses while assisting the states in collecting approximately $23 billion in uncollected state sales taxes that are currently due on Internet and other remote sales," according to the letter signed by such groups as the National Retail Federation and the Retail Industry Leaders Association and companies such as Amazon, Barnes and Noble, Best Buy, Target and Wal-Mart.

A similar bill has been introduced in the House. The House Judiciary Committee held a hearing on the issue last year but it is unclear if any additional action is planned.

An Amazon executive said Tuesday that he sees a shift in momentum in favor of legislation his company supports that would authorize states to require online company's such as his own to collect sales taxes from out of-state customers.

"I'm optimistic because the political dynamic has changed," Paul Misener, Amazon's vice president for global public policy, said during a discussion on the issue at the annual State of the Net conference.

Misener noted a bipartisan Senate bill that Amazon backs would allow the federal government to help cash-strapped states bring in additional revenues without having to provide any federal funds. He added that he is "heartened" that the debate appears to have shifted away from whether to pass legislation to how it should be crafted and how big of an exemption should be included for small businesses.

The Senate bill, authored by Sens. Dick Durbin, D-Ill., Mike Enzi, R-Wyo., and Lamar Alexander, R-Tenn., would authorize states to require online retailers to collect sales taxes from out-of-state customers if states agree to some tax simplification principles outlined in the bill or sign on to a multi-state tax simplification effort known as the Streamlined Sales Tax project.

States and some brick-and-mortar retailers have been pressing for congressional action since the Supreme Court ruled in 1992 that retailers do not have to collect sales taxes from customers in states where those firms do not have a store or some other physical presence. While the decision at the time applied to catalog sales, it has since been extended to sales made over the Internet. States argue the loophole has cost them billions of dollars in lost sales tax revenues and that the problem will get worse as more sales migrate to the Internet.

After fighting state efforts to address the problem on their own, Amazon came out in support of the Senate bill late last year, saying it wanted to see a federal solution to the issue. Reps. Steve Womack, R-Ark., and Jackie Speier, D-Calif., introduced similar legislation in the House but Amazon prefers the more limited small-business exemption in the Senate bill.

Bill Hughes, senior vice president of government relations for the Retail Industry Leaders Association, said while his group expects to see an aggressive push by congressional supporters in both chambers, he questioned whether the current Congress could move such legislation. "There is such low expectations for this Congress to be able to accomplish anything," Hughes said. His group, which favors both the Senate and House bills, represents major brick-and-click retailers including Best Buy, Target and Wal-Mart.

NetChoice Executive Director Steve DelBianco, who represents two of the biggest critics of the Internet sales tax measures, eBay and Overstock.com, argued the legislation will impose new record-keeping burdens on small businesses and predicted it will spark a backlash from many small firms that sell goods and services on the Internet. At the same time, he said the legislation faces long odds in the House where "there is a strong sentiment against new taxes."

Shoppers flocked to their computers to do their holiday shopping on Cyber Monday, which posted record online sales, according to the Wall Street Journal.

AT&T may be willing to give up as much as half of T-Mobile USA's customers to win approval of its bid to buy the firm, Bloomberg reports.

Amazon says that the Silk browser in its new Kindle Fire tablet does not violate user privacy but a key lawmaker is not satisfied with the company's claims, Ars Technica reports.

Google is expanding its mobile mapping services indoors to include maps of airports, shopping malls and other places, the San Jose Mercury News reports.

Read all of today's e-Reads on our Tech page.

Sens. Lamar Alexander, R-Tenn., Dick Durbin, D-Ill., and Mike Enzi, R-Wyo., are expected to introduce legislation on Wednesday that would close a loophole that now allows some Internet retailers to avoid collecting sales taxes from out-of-state customers.

The bipartisan Senate bill is similar, though not identical, to a measure introduced last month in the House by Reps. Steve Womack, R-Ark., and Jackie Speier, D-Calif., that would let states make online retailers collect sales taxes from out-of-state customers.

Both bills are targeted at closing a loophole left by a 1992 Supreme Court decision that exempted retailers from collecting sales taxes from customers in states where stores have no physical presence. While the ruling was directed at catalog stores, it has since been exploited by some online retailers as well.

The Senate bill would require that states meet certain standards to make it easier for retailers to collect sales taxes from out-of-state customers before they would be required to do so. The bill provides states with two ways to meet the bill's standards, according to a summary of the legislation obtained by Tech Daily Dose.

States could participate in a program known as the Streamlined Sales Tax project, which was formed by a group of states several years ago to simplify their sales tax codes. Alternatively, they could meet standards set by the bill including designating a single state agency where retailers can send the taxes, providing a uniform sales and use tax base within a state and protecting retailers from liability for mistakes they may make in collecting taxes on remote sales.

The Senate bill has a more limited small business exemption, exempting retailers with annual gross receipts of $500,000 or less from the bill's requirements.

Firms such as from eBay have voiced concern about the bill's impact on small online retailers, many of which use eBay to help sell their products online, and have called for a much bigger exemption for small businesses.

Sens. Ron Wyden, -D-Ore., and Kelly Ayotte, R-N.H., introduced a nonbinding resolution Wednesday that calls on the Senate to exempt small businesses from legislation that would authorize states to require Internet retailers to collect sales taxes from out-of-state customers.

"It is the sense of the Senate that Congress should not enact any legislation that would grant state governments the authority to impose any new burdensome or unfair tax collecting requirements on small Internet businesses and entrepreneurs, which would ultimately hurt the economy of, and consumers in, the United States," the resolution states.

The resolution appears to target legislation being crafted by a bipartisan group of senators that would authorize states to require online retailers to collect sales taxes from customers in states where the stores have no brick and mortar building.

A 1992 Supreme Court decision found that states cannot require retailers to collect sales taxes to people in states where those retailers lack a physical presence. Since then, states have complained that they are losing billions of dollars in revenues because of the loophole, which originally applied to catalog retailers but has since been extended to online retailers.

Sens. Lamar Alexander, R-Tenn., Mike Enzi, R-Wyo., and Dick Durbin, D-Ill., were expected to introduce their online sales tax bill this week but sources say the timing could slip to next week. The Senate measure is expected to be similar, though not identical, to a bipartisan bill introduced in the House last month.

Some firms like eBay say the proposed Senate bill and the House legislation do not provide a big enough exemption for small businesses. They argue that the threshold to qualify for the exemption in both the House and Senate bills is far too low.

"Today's Senate resolution recognizes the bipartisan support for shielding small businesses expanding on the Internet from facing new tax barriers to success," eBay Vice President for Government Relations and Deputy General Counsel Tod Cohen said in a statement on the Wyden-Ayotte resolution.

"Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will unbalance the playing field between giant retailers and small business retailers on the Internet."

Meanwhile, 126 national and state retail groups and companies wrote the Joint Select Committee on Deficit Reduction on Wednesday to urge the panel to include in its deficit reduction package a provision that would authorize states to require online retailers to collect sales taxes from out-of-state customers. The so-called super committee is charged with developing a package by Thanksgiving with more than $1 trillion in budget savings.

"As you seek solutions to address the federal budget, any final product will undoubtedly have an impact on the states, which are likewise facing their own budget crises," according to the letter signed by the American Booksellers Association, National Association of Chain Drug Stores, Retail Industry Leaders Association, National Retail Federation, and others. "Consistent with the goals of the Joint Select Committee on Deficit Reduction, Congress has an opportunity to help the states resolve their own budget shortfalls by enhancing states' rights over sales tax collection authority and in the process closing a loophole that will level the playing field for all merchants."

With success comes congressional attention. That may be the message online coupon provider Groupon is getting from two lawmakers.

Groupon recently announced plans to go public and is seeking $750 million from investors. But the company is also getting some unwanted attention from the chairmen of the House Bipartisan Privacy Caucus over reports that it plans to collect and share more information about its users.

Reps. Joe Barton, R-Texas, and Ed Markey, D-Mass., wrote Groupon Tuesday voicing concern over the firm's privacy changes and demanded answers by Aug. 10 from the Chicago-based company to a slew of questions related to its privacy policies.

"We want to make sure that 'the Groupon Promise' is kept and that going after a good online deal doesn't lead to your information being sold to the highest bidder," Barton said in a joint news release. Barton and Markey are both senior members of the House Energy and Commerce Committee.

In their letter to Groupon CEO Andrew Mason, Barton and Markey asked Groupon to detail the type of information it collects and from what sources; whether it tracks its users' locations and if so will it allow them to opt out of such tracking; what mechanisms it uses to determine its users' ages; and whether its partners must abide by Groupon's privacy policies.

Barton and Markey have been aggressive in calling out major Internet firms such as Facebook and Google when the lawmakers believe they have violated their users' privacy.

Federal Trade Commission Chairman Jon Leibowitz says the commission is looking closely into concerns raised about Apple's "In App" purchases on mobile devices and other applications that are free to download but generate charges later on for products and services within those applications.

In-App purchases are part of new programs on Apple's iTunes store that allow companies to charge for products and services, and in some cases, items that act like electronic tokens to be used in games. Rep. Ed Markey, D-Mass., and other lawmakers raised questions about the services earlier this month after parents complained in a Washington Post article about the charges they received stemming from games their children played on an iPhone, iPad or another device.

"We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases," Leibowitz wrote in a letter to Markey last week. "Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications."

In response, Apple noted that a password is required to purchase any goods on the company's App Store including In Apps. In addition, she said that iTunes includes parental control settings that allow parents to restrict app downloading or to turn off the In-App purchasing feature.

The top Democrat on the House Judiciary Committee is calling on the Justice Department to "carefully review" Google's proposed acquisition of travel software provider ITA Software to ensure competition in the online travel search market is protected.

"This is a significant matter, as travel and tourism play a critical and ever increasing role in the U.S. economy, with the online travel industry accounting for $80 billion and nearly 40 percent of all e-commerce activity in 2009," Judiciary ranking member John Conyers of Michigan said in a letter Friday to Assistant Attorney General for Antitrust Christine Varney. "I urge you to review the proposed deal carefully to ensure competition and transparency will be protected in the online travel industry."

Noting the "difficulties" in weighing such transactions, Conyers said many of these issues were highlighted in a report released last week by the American Antitrust Institute, "which concludes that an investigation of the proposed transaction is warranted."

Justice has been weighing the proposed deal for months. It is opposed by several online search sites that worry that Google will leverage its dominance in search to hamper competition in online travel search.

The AAI report urged close scrutiny of the deal by the Justice Department. "Google would own what many consider to be the premier technology that online travel agents, travel meta-search websites, and airline websites license from ITA to afford Internet users the ability to search real-time pricing and seat availability data in the course of shopping for airline tickets online," the report said. "Neither Google nor ITA currently competes in the provision of this data to Internet users by "online travel search" firms, but together they seem to have such firms surrounded."

Reps. Dan Lungren, R-Calif., and Zoe Lofgren, D-Calif., Wednesday introduced a nonbinding resolution calling on lawmakers to reject attempts to impose new sales taxes on small online retailers.

The resolution says Congress should not enact any legislation that would grant state governments the authority to "impose any new burdensome or unfair tax collecting requirements on small online businesses and entrepreneurs, which would ultimately hurt the economy and consumers in the United States."

States have long called on Congress to enact legislation that would allow them to require online retailers that do not have a physical presence in their states to collect sales taxes from those states' residents. States have complained that they lose billions in sales tax revenues when their residents buy from out-of-state retailers. The controversy stems from a 1992 Supreme Court decision that found retailers are not required to collect sales taxes from customers in states where they do not have a physical presence.

In response to complaints from some retailers about the burden of having to comply with differing state sales tax regimes, several states have banded together in recent years to form a compact known as the Streamlined Sales Tax Project, which is aimed at simplifying sales tax rules among the participating states. Legislation introduced last year by former Rep. Bill Delahunt, D-Mass., would have allowed states that are part of this project to require remote sellers to collect sales taxes from residents in their states.

That bill, however, was staunchly opposed by some major Internet firms.

The nonbinding resolution from Lungren and Lofgren is aimed at small online retailers, such as a solo entrepreneur who might sell products online from their House or over eBay, according to a House aide.

"The possibility of new taxes being levied on online retailers will have a negative impact on the online marketplace," Lungren said in a statement. "We should send a clear message that Congress should not burden small businesses with unfair tax schemes."