Shoppers have many outlets to choose from when looking to purchase products, one of which is to purchase online.  Most websites can undersell your local retail stores because they do not have to charge you sales tax if your residence is not co-located with their store or warehouse.  A state can only charge taxes to a customer that resides in that state.  Could this be a global form of tax evasion, could states not benefit from its taxation rights due to a technicality?  There are many organizations out there right now looking into solving this dilemma and producing an “internet sales tax.”  It is very likely that if a universal internet tax is accepted into law, it will result in more of a burden to online retailers and reduce growth of internet use and e-commerce.  Moreover, if this tax is implemented, how will this change the future of online shopping?  Below I will review some of the facts on shopping online and the impacts of internet taxation.

The first question most consumers may ask is what is the law on internet taxation?  The Supreme Court conducted a test to determine if a state tax excessively burdens interstate commerce.  The first rule is that a consumer must have nexus (a tie or link to) that state before it can collect taxes from that consumer.  “In Quill Corp. v. North Dakota, the Supreme Court explained that a business had to be physically present in a state before that state could require the business to collect use tax on its behalf” (Atkins, 2005, p. 1).  In the Quill Corp case, North Dakota sent a notice that the corporation owed taxes for purchases that North Dakota residents had made even though Quill Corp did not have any physical locations or employees in North Dakota.  The Supreme Court sided with Quill Corp stating that the taxpayer must have physical presence in the state in order for them to collect a tax on purchases.

Another fact on internet taxation is The 1998 Internet Tax Freedom Act of 2007, signed by President Bill Clinton.  What this law did was to make an effort to preserve commercial, educational, and informational potential of the internet.   This law prohibits federal, state and local governments from collecting internet only taxes such as the Quill Corp case.  The law does not exempt sales taxes from being collected on purchases made online, but rather that online purchases are still taxed as the same as local purchases and mail order purchases.  Congress has extended the law three times, was signed by President George Bush in 2007 and is currently good until November 2014.  “The online tax moratorium doesn’t apply to regular sales tax, however. A 1992 U.S. Supreme Court decision held that companies with no actual physical presences in a particular state — a store at the local mall, or a regional distribution center for example – were not required to charge sales tax for items they ship to that state” (Fuller, 2011, p. 1).  What this meant was that if you buy something online and the retailer doesn’t charge sales tax, you the consumer are supposed to send the tax to the appropriate authorities.

The last fact is the movement to simplify tax collection of online companies that do not have nexus presence in a state.  The movement, also called the Streamlined Sales and Use Tax Agreement (SST), is trying to reduce the administrative costs of collecting taxes.  “Even though the SST movement began with the worthy goal of simplification, over the years it has been overtaken by revenue-hungry tax administrators, politicians and interest groups — all too excited to continue their never-ending quest for more state tax revenue” (Williams & Stephenson, 2011, p. 2).  The SST has been struggled to overturn the Quill Corp decision and has been generally unsuccessful in swaying state and Congress to approve new legislation.

In conclusion, more and more consumers are turning to online shopping not just for the ease of finding hard to find products and locating a great deal, but in order to avoid being charged taxes because of the nexus rule.  This has been legally acceptable from looking at the Quill Corp. v. North Dakota, the 1998 Internet Tax Freedom Act of 2007.  Until the greedy politicians have a chance to change the laws governing internet use and business, buying online to avoid paying state taxes is not a form of tax evasion.  The opposition to this is the movement of the SST to enable states to charge taxes to consumers that are not nexus located to the retailer.  Many opposed to internet taxation are convinced that an increase in tax and fees will result in more expenses for the consumer and will ultimately restrict the growth of internet use and e-commerce (Griffin, Smith, and Watson, 2009).  Most Americans would agree that every state has a right to collect a form of sales tax that will help benefit their state, but in the end if an internet tax rate such as the SST is trying to pursue would primarily hurt the small business that are trying to conduct sales online.

Meet the Artists Series –

(Exhibit Preview)

Wednesday May 11, 2011, 6:00 pm – 8:00 pm

Roenoff’s first memories as a young child are memories of drawing. His parents had grown up as farmers and ranchers in Colorado and Wyoming and he spent younger days exploring family farms and the outdoors, capturing places and objects of affection in drawings and paintings that were part of his daily life.

“Everywhere I look, I see a painting. I have a great appreciation for the light, texture, and geometry that occur in nature and in life. All places, people, and things have inherent beauty. A rustic old truck, desolate place, or busy main street can emit peace, beauty, and a sense of place. Capturing the light, texture, and geometry of everyday life is my artistic ambition”.

Rosenoff paints with a palette knife because it gives him the opportunity to interact with paint in a very tactile, expressionistic way, thick and luscious with a buttery texture. Each viewer of his art is able to gain a strong sense of my physical interaction with the paint, with every stroke and manipulation visible forever. The surfaces of his paintings are very telling, sometimes resembling a mosaic of palette knife strokes. Never muddy, but clean and color conscious.

As an artist, he am inspired by prominent contemporary Italian masters Marco Sassone and Nicola Simbari, and more recently master oil painters Gregory Packard and Louisa McElwain.

For more information, please contact the gallery. 425-283-0461.

EzeeBank
First up, Manoj Dharap presented EzeeBank, a core banking solution for credit co-operative societies. Manoj has deep domain knowledge in the CCS market segment and has designed a solution that addresses the missing real-time data dashboard functionality of the industry. Today, the financial picture of a CCS is updated only once a month in a batch process.

Manoj is experiencing a long sales cycle of close to 12 months, but he has already created a sustainable company that has revenues and profits. He is exploring outside financing, but my concern is that unless the growth rate accelerates, this particular business may not fit the venture model. On the other hand, it can be a perfectly fine owner-owned-and-operated business.

Indian In A Box
Next, Ashish Sondhi pitched Indian In A Box, a retail concept for take-out Indian food. Ashish has three outlets in Pune, but wants to open one in London. Besides the fact that he is from London, I could not figure out why, instead of expanding the franchise in India, it makes sense to jump to London. The business is very different in London, and my feedback was that investors want a repeatable business model. Ashish wants to raise money and scale rapidly. For that to happen, he needs to show investors how his India model scales, without introducing a random London factor in the business.

Quadmo

Then, Rohit Rawal discussed Quadmo, an employee reward and recognition SaaS system for large enterprises. Rohit has already developed good validation in the Indian market, and is able to penetrate some sizeable accounts. In one of those accounts, Quadmo is integrating their software with SuccessFactors. Rohit is interested in exploring a U.S. go-to-market strategy, and I advised him to try to recruit a channel partner like SuccessFactor or Taleo with major presence in the talent management space. Since Rohit is a 1M/1M premium member, I will help him execute on this strategy. I also advised him to apply for the Microsoft Startup Challenge grant in the cloud category.

DIYComputerscience.com
We also had Parag Shah present DIYComputerscience.com, an intriguing concept for teaching foundational computer science through an online mechanism. In India, there is an abundance of programmers, but most of them lack a foundational computer science education. Parag’s pitch was somewhat all over the place, and he needs to focus on one market segment and a corresponding business model that can then be validated.

My hunch is that he should focus on the corporate training market, and train programmers for small and medium companies that lack in-house training departments. Most of the larger IT companies in India have some form of in-house training departments. But for the SME segment, this may be a value proposition that he can monetize. Two CEOs of product companies in the audience offered to validate this on the spot, and Parag had a rather productive afternoon from the look of it.

Wish Them Today
Last up was Pratik Rokade pitching Wish Them Today, a paid SMS birthday reminder service. While the service is useful, my impression is that it is very easy to copy and is likely to get subsumed into some other product’s feature. I advised Pratik to keep his job, and while it is OK for him to play with this idea, I would not jump into this particular opportunity with both feet.

Parag Shah’s DIYComputerscience.com was chosen the best business of those presented by audience members through a poll on the 1M/1M Facebook page. Congratulations!

Overall, the most promising company in this group is Quadmo, although I also liked EzeeBank and DIYComputerScience. The last of these needs a lot of work to extract and polish the diamond in the rough, but it may be a worthwhile endeavor.

Our next online roundtable will be held on April 28 and will focus on entrepreneurs from the Mountain States region of the U.S. Recordings of previous online roundtables are all available here. You can register for the upcoming roundtables here.

About Sramana Mitra
Sramana Mitra is the founder of the One Million by One Million (1M/1M) initiative, an educational, business development and incubation program that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant, she writes the blog Sramana Mitra On Strategy, and is author of the Entrepreneur Journeys book series and Vision India 2020. From 2008 to 2010, Mitra was a columnist for Forbes. As an entrepreneur CEO, she ran three companies: DAIS, Intarka, and Uuma. She has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology.

The Walla Walla Valley Wine Alliance encourages our local community to come out and support their wineries and winemakers.

A listing of participating wineries, their hours of operation, tasting fees, and special events for Spring Release Weekend, can be found at www.wallawallawine.com.

The Walla Walla Valley Wine Alliance is a winery and grower partnership committed to furthering the awareness of the quality wineries, wines, and vineyards of the Walla Walla Valley Appellation.  Our mission is to support and promote quality and excellence in our wine industry and to further national and international recognition of our region.  For more information, please visit www.wallawallawine.com.

“Partnering with our home team, the Seattle Sounders, seemed the perfect way to celebrate our 30^th birthday as Seattle’s original craft brewer,” said Robert Rentsch, brand manager for Redhook Ale Brewery. “We are psyched about the opportunity to give soccer fans the chance to root for their favorite team while drinking a great beer. We all know you can’t give your full 90 with a parched throat.”

Redhook Ale Brewery was established in 1981 in Seattle’s Ballard neighborhood. The brewery has gone on to be recognized as a craft brewing pioneer with distribution throughout the U.S.  Maintaining its Pacific Northwest roots, Redhook’s West Coast brewery is located in Woodinville, Wash.

About Redhook

Redhook was born out of the energy and spirit of the early 80’s in the heart of Seattle. While the term didn’t exist at the time, Redhook became one of America’s first “craft” breweries.  From a modest start in a former transmission shop in the Seattle neighborhood of Ballard, to the current breweries in Woodinville, Wash. and Portsmouth, N.H., Redhook has become one of America’s most recognized craft breweries.  While Redhook has “grown up” over the past 30 years, one thing has never changed – it’s still brewing great beers like ESB, Long Hammer IPA, Copperhook, and seasonal brews.  Most importantly, Redhook makes sure it has fun doing it.   Redhook’s beers are available in both draught and bottles and are distributed nationally through a network of wholesale distributors. For more information, visit www.redhook.com.

The award recognition is sponsored by The Association of Fundraising Professionals – Washington Chapter.

Individuals and organizations are encouraged to nominate deserving philanthropists for the following awards:

• Outstanding Philanthropic Corporation
• Outstanding Philanthropic Small Business
• Outstanding Philanthropic Foundation
• Outstanding Philanthropic Organization (raises private funds and makes grants)
• Outstanding Philanthropist(s) (individual or couple)
• Outstanding Philanthropic Family
• Outstanding Young Philanthropist (up to age 21)

Nomination forms can be downloaded at https://afpwc.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_82459 and nomination letters must be postmarked by June 3, 2011. This annual event celebrates philanthropy in local communities throughout Washington state. Ray Li, director of strategic initiatives at Neighborhood House in Seattle, and Norman B. Rice, president and chief executive officer of The Seattle Foundation, co-chair the awards committee. All nominees are welcome.

“Philanthropy is as important today as ever,” said Peter Drury, president of AFP-Washington Chapter and founder of nonprofit organization management company DZO Strategists LLC. “Were philanthropy ever to dry up and go away, our communities would be deeply impoverished. Museums, social services, education, sustainability initiatives, arts, health care, food banks, and international relief organizations all are made possible by the power of our collective generosity. We strongly encourage people to nominate those who inspire them by their spirit of giving and by their positive influence in our community through philanthropy.”

2010 honorees included:

• McKinstry Co. – Outstanding Corporation
• Whatcom Community Foundation – Outstanding Organization
• Matt Griffin and Evelyne Rozner – Outstanding Philanthropists
• The Moles Family – Outstanding Family
• Madeleine Colvin and Grace Grubb – Outstanding Youth
• Deliver Express, Inc. – Outstanding Small Company

About the Association of Fundraising Professionals: The Washington Chapter of the Association of Fundraising Professionals (AFP) presents one of the oldest and largest National Philanthropy Day celebrations in the country with more than 1,200 attendees. Each November the organization joins national and international colleagues to celebrate exceptional individuals and organizations that have dedicated themselves to philanthropy. Nationally, AFP represents more than 26,000 members in 172 chapters throughout the world, working to advance philanthropy through advocacy, research, education and certification programs. AFP fosters development and growth of fundraising professionals and promotes high ethical standards in the fundraising profession. For more information, visit www.afpwashington.org or send an e-mail to npd@afpwashington.org

Hosted by the Bellevue Police Department and the City of Bellevue’s Cultural Diversity Program, the event will feature speakers John Hamer, president of the Washington News Council; and Chief Linda Pillo of the Bellevue Police Department. The goal of this program is to educate the public about this important, timely topic and build relationships between the community and law enforcement.

The program will also explore how the media shapes society’s view of interaction between law enforcement and the public.

A 30 minute presentation will be followed by a 90 minute facilitated discussion between the audience and Bellevue police officers.

FREE.

For more information and to RSVP, please contact Kevin Henry at khenry@bellevuewa.gov.

Just over a year ago when President Obama, then-U.S. House Speaker Nancy Pelosi, D-Calif., and Majority Leader Sen. Harry Reid, D-Nev., rammed Obamacare through Congress, no one really knew what was in the 2,700 pages of the Patient Protection and Affordable Care Act of 2010 (PPACA). But small business soon learned that it wasn’t so affordable.

For example, the law includes a provision that requires all businesses to file a 1099 form to the Internal Revenue Service for purchases or payments of $600 or more in a calendar year.  Currently, businesses must file a 1099 for such payments made to independent contractors or firms that aren’t partnerships or corporations. But PPACA requires that businesses file 1099s for virtually all such payments.

Buy a truck for your business? Send a 1099 to the Ford dealership. Spend more than $600 on printing? Send a 1099 to UPS Store. Run a small dairy? Send 1099s to your hay supplier, the feed store, the corner gas station and every company that sold you equipment or supplies.

The goal of the new requirement was to capture what supporters theorized was $17 billion in fines and lost tax revenue from unreported transactions. Once collected, it would be used to help finance the health reform law. But the provision created a nightmare for the owners of hundreds of thousands of small businesses across America who faced an avalanche of costly paperwork.

The public reaction was so strong that a bill to repeal the requirement sailed through the House on March 3 by a 314-112 vote and breezed unchanged through the U.S. Senate by 87-12 on April 5. Among Washington’s delegation, only Sen. Patty Murray and Congressmen Jim McDermott (Seattle) and Norm Dicks (Bremerton), all Democrats, voted against it.

To recoup the $17 billion in revenue, House Republicans rewrote the way the government pays for subsidies under the health exchanges created by the new law. Originally, consumers were allowed to keep much of the money when the government overpaid them. Now, the government will recover those overpayments.

President Obama is expected to sign the repeal into law.

The 1099 repeal is the first change to Obamacare. Is it the last? Probably not. However, as foolish as the 1099 reporting provision was, it was difficult to repeal. For example, even as compelling as the case for repeal was, Sen. Robert Menendez, D-N.J., barely lost a poison-pill amendment meant to delay the bill’s passage.

Are there other problems in the law for small businesses? Yes. For example, a tax credit that was supposed to help small employers afford health insurance turned out to be so limited that virtually no one qualifies for it. Lawmakers must reconfigure the tax credit to make it work or find another way to help small employers provide coverage.

Are there other provisions of the new law that will cause problems? Without a doubt.

In fact, just a few portions of the law have taken effect, yet the Obama administration has granted temporary waivers to 1,168 businesses, insurers, unions and others who argued that those provisions would force them to drop their existing insurance coverage or suffer irreparable harm. More waivers are anticipated.

So, if small businesses are jeopardized by the provisions of the health-care law, they can get waivers as well, right? Perhaps not. Critics charge that the waiver process favors large corporations and unions because they can afford to go through the process, while small employers don’t have the money or time to apply for a waiver.

Before the law was passed, Pelosi said, “We have to pass the bill so you can find out what is in it.” More than a year after it became law, we are still finding out what’s in it—and which elements need to be fixed or repealed.

Hopefully, fixing the problems will be a little easier and more timely than what has happened with the 1099 repeal.

About the Author

Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 7,400 members representing 650,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.

2012 Seattle Schedule

Beginning May 28, 2012, the Disney Wonder will sail a total of 14 seven-night cruises from the Port of Seattle to Tracy Arm, Skagway, Juneau and Ketchikan, Alaska, as well as Victoria, British Columbia.

These cruises will combine the natural wonder and adventurous spirit of Alaska with the unparalleled, family-friendly experience found on a Disney Cruise Line ship.   Disney Cruise Line works closely with Alaskan tour operators to create exclusive-to-Disney family-friendly Port Adventures that allow guests to best experience Alaska’s natural beauty and rich history.

On their Alaskan adventure, guests may catch a glimpse of a brown bear, bald eagle or humpback whale. They can explore magnificent glaciers and fjords in Juneau. In Ketchikan, guests can fish for some of the largest wild salmon in the world and learn about local culture through hand-carved totem poles. In Skagway, Disney Cruise Line guests can traverse panoramic landscapes by railway, or pan for gold like miners from the famous Klondike gold rush.

Rates for the seven-night Alaska cruise itinerary departing from Seattle start at $917 per person for a standard inside stateroom, based on double occupancy.

To learn more about Disney Cruise Line or to book a vacation, guests can visit Bellevue Cruise Holidays or call Eastside Entrepreneurs Jim & Colleen Turner at:  425-453-7696

In this role, technology-veteran Dorbala will leverage his more than a decade of enterprise technology product management experience to lead Vertafore’s product management efforts, refining the company’s strategy and expanding its breadth of offerings to the insurance ecosystem. Dorbala reports directly to Euan Menzies, president and chief executive officer at Vertafore.

“Customer feedback has always driven innovation at Vertafore,” said Menzies. “Through Sharath’s extensive experience and proven leadership skills, we will continue to drive our business priorities and realize a clear path to serving our customers and setting the pace in the insurance industry. We look forward to Sharath’s contributions not only to our senior leadership team, but to the company overall.”

After spending a number of years as an engineer and architect for multiple business-to-business technology companies, Dorbala transitioned into product management when he joined Oracle in 2004. Dorbala then spent nearly nine years at Amdocs, a global company with revenue of $3 billion in 2010, most recently as vice president of corporate strategy and development. In this role, he demonstrated his capacity to lead global product strategy and management teams for product portfolios with revenues in excess of several hundred million dollars, in addition to identifying strategic opportunities and improving Amdocs’ competitive position.

“My role at Vertafore allows me the opportunity to shape the next generation of products to serve the insurance industry,” said Dorbala. “Innovation is a top priority, and I look forward to contributing my knowledge of technology best practices and putting them in play at Vertafore.”