There are a lot of states who want to follow the lead of Maryland. At the end of the day, states tend to bounce off one another when they create a policy, so this is very interesting to say the least.
If other states happen to follow, then so be it. With this type of thing, you usually have a single state who will go through court and then when it gets the go-ahead, the other states will then start doing it as well.
Even though it is set to start in the next month, it’s safe to say that the law is now the target of a lawsuit from a lot of tech companies. Internet companies are saying that the law is going to violate the Internet Tax Freedom Act. This is a 1998 Federal Tax act and some are concerned that it is going to show discriminatory tax on things such as electronic e-commerce. The law is going to have big implications for any state-based efforts and some say that it is going to raise taxes as well.
Problems with Tax
There may well be short-term problems when it comes to tax. If a lot of states choose to follow the path that Maryland is carving then it may be that it pushes for a complete reform of the ITFA. When Congress was able to pass the ITFA, or the Internet Tax Freedom Act, it was going to last 3 years but since then it has been revived a total of 8 times.
Groups who represent the state government have admitted that more oversight is required and that internet tax companies need to shed some light on the advancement. This will ensure that it reflects congressional intent, and that the taxing authority is not interfered with without a good reason.
The Maryland lawsuit has been filed by the Chamber of Commerce, along with a number of companies. This happens to include Amazon and Facebook. They have alleged that this law violates the Internet Tax Freedom Act. Of course, if this movement does pass then it will certainly affect every online provider who chooses to offer services to the area, whether it’s gambling websites or eCommerce providers. It shouldn’t affect sites that do not offer a service though, including casino review sites such as Bonusetu.com or travel advice websites, as the service is not being directly offered to residents of Maryland.
A Bad Tax Policy
Some believe that this is a bad tax policy in general. They also believe that it is entirely illegal. Some say that it is going to be defeated and that it’s not a matter of why, it’s a matter of when. When you look at the internet regulations that were passed in the 1990s, which include the famous Communications Decency Act, you will soon see that this gives social media businesses some protection.
This is especially the case from user content that is all published on the platforms. The Internet Freedom Act is easily seen by some people as being very outdated, but at the end of the day, it would seem that there are a lot more positive movements to come.
The Internet is a Very Different Place
The original was drafted in 1998 and the internet is very different to what it was back then. There are many states which are following the cue of Maryland. When you look at Connecticut for example, you will soon see that a bill has been introduced and this would leverage taxes on the gross revenue that comes from social media.
Of course, it doesn’t matter whether Maryland is going to win their lawsuit or not because in South Dakota, you will see that they have imposed a sales tax on companies with gross revenue from the sales in the area.
The Supreme Law then upheld the law and this meant that South Dakota could then collect sales taxes from vendors that are out of the state. The ruling reversed the Supreme Court Decision, and this states that the justice is now no longer applicable or constitutional. This is especially the case when you look at the ever-changing landscape of the media.
Maryland Going Forward
If the Maryland tax does go forward, then it would seem that a lot of smaller states are then going to follow. Even if a business does not have a lot of activity in the state of Maryland then it’s more than possible that they are going to be opposed to this. The main reason is that they are worried that there could be a lot of money at stake in various other states and of course, this would amount to even more issues in the future.
Senate President Bill Ferguson, who is the biggest campaigner for the new tax has stated that he’s confident in the law and that the legalities are going to bring about positive change. It’s troubling that some states won’t have the right to monitor their corporate activity in general. Some people need to think carefully about the rules and they also need to make sure that they are thinking about the future of businesses in general.