To:ALL From:ALAN SCHULTZ #5 Subj:The Tax Man Cometh... Date:10 Sep 91 01:04 am City:Sanford NC This is from ZiffNet NewsBytes on Compuserve, watch out Sysops, this could spread... NewsBytes BBS SERVICES FIGHT NEW YORK STATE "DOWNLOAD" TAX 09/09/91 ALBANY, NEW YORK, U.S.A., 1991 AUG 9 (NB) -- New York State bulletin board system operators (sysops) have banded together to attempt to roll back legislation that imposes a requirement on sysops to collect New York State sales tax on software downloaded by users of their systems. The legislation, enacted as part of the New York state budget agreement (Senate bill #6079, Assembly #8491), went into effect on September 1st and, according to the understanding of an organization of New York sysops (NYBBS), requires sysops to remit to New York State sales tax on any software downloaded. It is the understanding of this group that the tax requirement includes not only commercial software but also "shareware" and public domain software (in the case of public domain software, the sysop is required to estimate the "value" of the software and then remit applicable tax). The tax remission requirement is said to be in effect for the sysop whether or not the downloader ever pays for the software. Tony Mack, a sysop in the Albany area, told Newsbytes that 31 sysops met on Saturday, September 7th with legislators, attempting to reach agreement on modifications. Mack said that the legislators, Assemblyman Paul Tonko (D - 105th Dist) and James Tedisco (R - 107th), told the group that they believed that exemptions could be made for BBSs that did not accept donations of any type and imposed no restrictions on downloading such as "upload/download ratios" or membership requirements. Mack said that the compromise was unacceptable and pointed to the fact that many BBS accept donations simply to pay for Usenet charges and equipment upgrades. Jack Brooks, sysop of New York City's Dorsai Embassy, agreed with Mack, telling Newsbytes, "Dorsai charges users of our Usenet interface $25 a year. This charge is an attempt to offset our monthly payments for the Usenet feed and, quite frankly, it doesn't cover it so we still have to make it up from our own pockets. This law is absurd and must be repealed." Brooks said that Dorsai has issued a public statement on the issue and is asking its users to bring appropriate political action to repeal the regulation. The statement says, in part, "It is the policy of The Dorsai Diplomatic Mission to oppose any and all legislation that would diminish and hamper the goals, continued operation and successes of the telecommunications community at large. Such an act is New York State Senate Bill #6078 and Assembly Bill #8491 sections 154, 155, 156, and 157. These statues would destroy the free exchange of information, ideas, and public domain software guaranteed by the Constitution." The BBS of the New York Amateur Computer Club (NYACC) also responded to the regulation with a message from sysop Hank Kee, saying, in part, "This is an ill advised law that muzzles the free flow of electronic information. This bill needs to be repealed. If not, I will forced to inhibit all file transfer activity on this BBS." NYACC distributes, through its BBS, the PC Blue Library, a multi-hundred volume library of MS-DOS public domain and shareware software. Mike Godwin, in-house counsel of the Electronic Frontier Foundation, told Newsbytes that Kee's notification that file transfer activities may be terminated is an example of the effect that the tax requirement will have. Godwin said, "I think that this kind of ill-conceived law is very likely to impose a chilling effect on the exercise of the rights of BBS users to communicate and share free software." Godwin continued, "It's as if you had to charge a sales tax whenever a neighbor brings a cup of sugar to someone's door. We (EFF) strongly recommend that the officials responsible for both this law and its interpretation reconsider this action." Officials at GEnie and CompuServe were unavailable for comment on how the legislation might impact their services within New York State. (Barbara E. McMullen & John F. McMullen//19910909)