Technology & Litigation

Very interesting article from CNet regarding the proposal to be made by Senator Dick Durbin (D-Ill).  The article can be found here.   Basic point of the article is that Senator Durbin wants to add sales taxes to on-line sellers like Amazon and iTunes (although I would note that I think iTunes already has a tax component) for all purchases.  The idea being that brick and mortar stores in a given state shouldn't have to foot the bill for these new-fangled on-line superstores.  They should have to pay their share too, dang it.  Of course the reality is that the government sees an area that isn't taxed and could be.  It is a revenue stream that is, thus far, untapped and we can't have those.  

There are two points that I think will arise if something like this is actually passed.  First, you will have new components to add to your licensing agreement negotiations.  It will now have to be clear in the TOC that you are accepting the inclusion of these taxes on your purchase.  Otherwise, you'll have folks suing companies because they didn't know they would have taxes too.  Second, your favorite technology legal counsel (and probably many others) will find a way to start a new company aimed at providing third-party processing services to these companies to handle their tax compliance issues.  Every state is a little different on its taxing scheme and each one of those will have to be addressed and sorted.  The costs of performing that service in-house would be astronomical, so companies will, instead, out-source that to entrepreneurial young spirits that are willing to hold themselves out as knowledgeable.  It will be a cost-benefit and liability shifting model.  Because while the government works to get its, there are always free market capitalist seeing the benefits to be derived.  That is what makes entrepreneurs so grand.