E-Commerce Tax Alert From CCH Provides Vital Guidance For "Dot Com" Companies

(RIVERWOODS, ILL., April 10, 2000) – Businesses rushing to cash in on the cutting-edge rewards of e-commerce could find themselves tripped up by the mundane realities of taxes, according to CCH INCORPORATED (CCH), a leading provider of tax and business law information. To help companies dodge potential tax land mines as they seek success in cyberspace, CCH is offering E-Commerce Tax Alert, an essential planning tool for anyone doing business on the web. The Alert is a monthly newsletter available over the Internet via the CCH Internet Tax Research NetWork™. ($397. To order or for more information, contact your CCH sales representative at 888 CCH REPS, call 800-449-8114, or visit http://tax.cchgroup.com.)

Misconceptions about the taxation of electronic commerce are almost as plentiful as the number of firms venturing into electronic selling and delivery of products. In fact, an alarming number of cyberspace entrepreneurs believe that the much talked-about Internet Tax Freedom Act makes all e-commerce transactions tax-free. In fact, the Act prevents states from enacting new tax laws aimed at the Internet, but doesn’t touch existing law.

"States could be very busy in just enforcing existing rules over the next few years without pursuing new and novel theories of nexus relating to e-business," stated Richard J. Prem, a partner in the E-business Tax Services Group of Deloitte & Touche LLP, in the first issue of the E-Commerce Tax Alert. Prem is a member of the E-Commerce Tax Alert editorial advisory board

Some companies haven’t even registered to collect sales tax, under the mistaken impression that because their businesses operate over the Internet they’re exempt, even from tax on sales in their home state. Such companies can forget floating lucrative IPOs until they come into compliance – if they are not assessed out of business first.

Turning Clicks into Bricks

As the first issue of E-Commerce Tax Alert points out, companies may try to shield the electronic side of their businesses from state taxation, only to fall into some of the classic nexus traps that have plagued traditional mail-order companies.

Using a parent company’s call center, for example, creates nexus in the state where the call center is located. Similarly, a "dot com" business may assume bricks-and-mortar presence – and may be taxed accordingly – if its customers can obtain warranty or repair services for products at the facilities of a parent or affiliate company. Feature articles in the Alert bring these and other pitfalls to readers’ attention and, each month, explore significant and emerging issues such as audit requirements for electronic records or the new role of VAT in the U.S. marketplace.

In addition to timely articles, each monthly issue of E-Commerce Tax Alert contains important state law updates, notices of related conferences and helpful charts, such as the one in the premiere issue summarizing the taxability of downloaded software in the various states.

Editorial Board Assures Provides Insight, Answers Questions

Guiding the newsletter and contributing to it is a distinguished editorial board whose members are active practitioners on the frontiers of e-commerce. With their day-to-day involvement with taxation of e-commerce, board members assure the relevance and timeliness of the Alert’s contents.

The board members are:

Katrina Doerfler, Senior Manager, State and Local Taxes, Cisco Systems Inc.

Stephanie Lipinski Galland, Director, External Tax Relations, Gap Inc.

Jeanne P. Goulet, Director of Taxes, Software and E-business Solutions, IBM Corp.

Karl A. Frieden, Partner, State & Local Tax Services, Arthur Andersen LLP

Richard J. Prem, Partner, E-business Tax Services Group, Deloitte & Touche LLP

Terrence P. Ryan, Director, State & Local Taxes, Apple Computer

Members of the board will also respond to questions from their fellow tax managers in the newsletter. Readers merely have to click a button on the Alert homepage to pose their question.

Availability and Pricing

To order or for more information, contact your CCH sales representative at 888 CCH REPS, call 800-449-8114, or visit http://tax.cchgroup.com. A one-year subscription to E-Commerce Tax Alert on the CCH Tax Research NetWork is $397.

About CCH INCORPORATED

CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients. The company produces more than 700 electronic and print products for the tax, legal, securities, insurance, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH web site can be accessed at www.cch.com. The CCH Federal and State Tax web site can be accessed at http://tax.cchgroup.com.

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