NetChoice iAWFUL List Ranks Top Threats to Internet Services

Internet Taxes, Outdated Legacy Laws and Misguided Child Safety Proposals top list

WASHINGTON, Oct. 2, 2012 /PRNewswire-USNewswire/ -- NetChoice's Fall 2012 iAWFUL list identifies federal and state legislation that will threaten the sustainability of many online services.  Top offenders including state tax grabs and outdated regulations that prevent start-ups from correcting market inefficiencies.

The number one offender on the iAWFUL list is a cluster of federal bills that would impose new tax burdens on online and catalog sellers while taking away states' sovereign right to protect their businesses from foreign tax collectors.

"These laws show a cavalier willingness to saddle small businesses with new tax burdens," said Steve DelBianco, executive director of NetChoice. "A shocking number of politicians continue to advocate for new Internet taxes as big revenue raises and rescue plan for local retailers, but they're all false hopes."  

State tax collectors have been trying – and failing – for a decade to get Congress to let states impose their taxes on businesses outside their jurisdiction.  The most recent crop of Internet sales tax bills would acquiesce to these tax collectors without delivering a simple system to protect online and catalog sellers from onerous burdens and auditing risks.

The Fall 2012 iAWFUL runner up features outdated laws being used to squash competition, stifle innovation, and increase costs to consumers in cities like Boston, Las Vegas, New York, San Francisco, Seattle, Tampa, and Washington.

New disruptive business models from companies like Uber, AirBNB, and TrueCar are generating opposition from traditional entrenched businesses.  The worst part is that entrenched businesses are twisting laws designed to protect consumers to prevent them from enjoying the benefits of these new business models.

"It's unfortunate that old entrenched businesses are stopping online innovations that could save consumers money," said DelBianco.  "Consumer protection laws should be used to protect consumers, not businesses that feel threatened by new forms of competition."

The iAWFUL list, created in 2009, identifies America's worst legislative and regulatory proposals targeted at the Internet. The iAWFUL website urges Internet users to join the fight to against bills that threaten online commerce and communication. The list is updated twice a year to reflect the most immediate dangers, based on regulatory severity and likelihood of passage.

"In many cases, laws on the iAWFUL list are dangerous because of unintended consequences," said DelBianco. "Collecting taxes due and keeping children safe are good goals, but they should not be accomplished through cumbersome regulations that will cause more harm than good." 

The full iAWFUL list, complete with bill descriptions, is available at www.iAWFUL.com. Twitter users can follow iAWFUL developments on the NetChoice feed (@NetChoice) and via the hashtag #iAWFUL.

The entire 2012 iAWFUL includes:

# 1 - Forcing New Tax Burdens on Remote Sellers
What's so iAWFUL?  Federal bills would impose new tax burdens on online and catalog sellers while taking away states' sovereign right to protect their businesses from out-of-state tax collectors. (S 1832, S1452/HB 2701, HB 3179).

# 2 - Misusing Consumer Protection Laws to Prevent Competition and Frustrate Consumers
What's so iAWFUL?  Old and obsolete laws are being misused to squash competition, stifle innovation, and increase costs to consumers. (Boston, Las Vegas, New York, Tampa, and Washington)

# 3 - States Creating Online Taxing Powers 
What's so iAWFUL?  A state tax grab that makes it harder for the state's small publishers and websites to earn advertising revenue. (PA DoR Bulletin)

# 4 - Curbing Online Service and Innovation for Children
What's so iAWFUL?  Federal efforts to protect children online would create new regulations that stifle innovation and actually decrease the availability of child-directed services. (COPPA NPRM)

# 5 - What Happens to Your Online Account When You Die?
What's so iAWFUL?  Some state laws allow an appointed executor to counter your express wishes about how your online accounts are handled when you die. (OK HB 2800, NJ A2943 & S2077)

# 6 - Extending Hotel Taxes to Out-of-State Travel Agent Services
What's so iAWFUL?  Cities and states are threatening travel agents and online travel sites with the wrong tax rate in the wrong jurisdiction and asking consumers to pay for it.

NetChoice is a public policy advocacy organization that promotes Internet innovation and communication and fights threats to online commerce at state, federal and international levels.  The Washington, DC-based group protects Internet commerce-driven competition and battles rules that hinder consumer choice and hurt small businesses.  For more information, see www.netchoice.org.

SOURCE NetChoice