Re: OTP, OECD and tax collection

[John Messing <jmessing@law-on-line.com>]

For starters, the group might consider deciding whether to give a warning to
potential users of the software that use of the software with the options
you have identified could result in certain legal consequences, in order to
shield OTP from potential liability, in case a court disagreed with your own
personal beliefs. Ancillary to that decision, you might consider obtaining
qualified legal advice as to the potential liability of OTP and/or its
active members with respect to such issues.

-----Original Message-----
From: Donald E. Eastlake 3rd <dee3@torque.pothole.com>
To: John Messing <jmessing@law-on-line.com>
Cc: ietf-trade@lists.eListX.com <ietf-trade@lists.eListX.com>; Steve Schear
<schear@lvcm.com>
Date: Sunday, October 04, 1998 7:34 PM
Subject: Re: OTP, OECD and tax collection


>
>It is up to the consensus of this working group as to what it wants to
>include, exclude, ignore, or consider in future versions of IOTP.  I
>do not believe that the operation of software that permits certain
>options to be activated at the operator's discretion, such as the
>collection of taxes or the automatic copying of all messages to a law
>enforcement authority, constitutes consent to the actual activation of
>such options.
>
>I'd be interested in any concrete and specific suggestions you might
>have to improve the IOTP protocol.
>
>From:  John Messing <jmessing@law-on-line.com>
>Message-ID:  <000801bdefb9$bfdd9500$7825c5a9@www..azstarnet.com>
>To:  ietf-trade@lists.eListX.com, Steve Schear <schear@lvcm.com>
>Date:  Sun, 4 Oct 1998 10:09:27 -0700
>
>>This is one of those issues which is not as straightforward as it may
first
>>appear. Apart from merchants whose businesses are physically located
within
>>the borders of an EEC state, the power of the state to tax may depend upon
>>notions of extraterritorial application of the tax laws. Thus, if an
>
>My understanding is that there is some motion towards an agreement
>within the OECD nations which would eliminate problems of
>extraterritorial application of law for those countries.
>
>>American corporation sells goods to a German citizen and has no office or
>>outlet in Germany, then in a non-virtual transaction, there is little
legal
>>basis for Germany to claim the right to tax the transaction. The German
>
>It is my understanding that many places, such as Massachusetts, where
>I reside, have "sales and use" taxes which tax not just items sold
>within their territory, but also items imported into and used within
>their territory.
>
>>citizen had to have been physically located in another jurisdiction to
have
>>completed the purchase. But in a virtual transaction where the Internet
>>server and the seller are located physically outside of Germany, the
>>situation may be less clear. If Germany claims the right to tax any
>>transaction involving a buyer whose computer or delivery address is
located
>>within its borders, a question will arise about the basis in international
>>law of the power to tax. To the extent that consent to tax is one such
>>basis, then inclusion of software at the Internet server used by the
seller
>>which permits German taxation through OTP could arguably be implied
consent
>       ^^^^^^^
>
>>to tax -- a result perhaps never intended by OTP or the buyer. It is quite
>>conceivable that Germany would hire an American attorney to collect such
>>taxes as postulated by this example through the American courts, which an
>>American corporation could not ignore. Apart from the issue of taxation,
>>there are other questions about extraterritorial applicable of laws, such
as
>>digital signature legislation, which involve similar considerations. In
>>order to avoid such questions, OTP refused to consider them in earlier
>>drafts. Taking a position or refusing to take a position on such issues in
>>light of the German request probably will result practically in a
>>substantive decision one way or the other, like it or not, which means
that
>>such questions can no longer continue to be ignored as either a
theoretical
>>or practical matter.
>
>Thanks,
>Donald
>
>>-----Original Message-----
>>From: Steve Schear <schear@lvcm.com>
>>To: ietf-trade@lists.eListX.com <ietf-trade@lists.eListX.com>
>>Date: Saturday, October 03, 1998 10:23 PM
>>Subject: RE: OTP, OECD and tax collection
>>
>>
>>>David Burdett <David.Burdett@mondex.com> wrote:
>>>>Tax evasion is as old as the centuries. I doubt that OTP if its used for
>>>>tax collection by the governments will change peoples inclination to pay
>>>>(or not pay) one bit. The point is, if governments want to collect taxes
>>>>then they will find a way to do it and most merchants who have a
>>>>reputation to protect will follow it.
>>>
>>>This is really a rear-view outlook.  If we were in the 16th century, its
>>>like saying that because the Church has all this authority we're not
going
>>>to use the press to print anything secular.
>>>
>>>While it may be true that in the short run merchants with reputation may
go
>>>along with this foolishness, as long as their risks are low consumers
will
>>>shop wherever the price is lowest. 10% or more tax is enough separate
most
>>>consumers from their guilt and place the loyal merchants at a
considerable
>>>disadvantage. The complaint merchants will pressure the governments to
get
>>>tough (regulation always favors the regulated). If governments are not
able
>>>to pressure the non-complaint merchants, as I believe they will not (as
>>>they were unable to stem the Eurodollar trading), this is the beginning
of
>>>the end game for such taxes on the Net and perhaps in a broader sense as
>>>more commerce moves to the Net and places local merchants at an
increasing
>>>disadvantage.
>>>
>>>--Steve
>>>
>>>
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>>
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