Legislation for the World E-Commerce Organization January 28, 2001
MOTM 4103-Public Policy and Regulatory Requirements in Technology
Assignment 2- Mock Legislative Bill Outline
January 28, 2001
University of Denver
LEGISLATION FOR THE World E-commerce Organization (WECO)
Jonathan David
Dante Monteverde
Jim Reynolds
Legislation for the World E-Commerce Organization (WECO)
1. SECTION 1 (Purpose, Scope, Authority)
1.1. Purpose – The WECO, or World Electronic Commerce Organization, is a worldwide organization comprised of both developed and some developing countries that together prohibit internet taxation on both a local as well as global scale. It serves to make e-commerce, or the buying and selling of goods and services over the Internet, a tax-free business transaction. The United States’ recent enactment of the Internet Tax-Free Engagement Act is an example of some of the current laws in effect worldwide. The ‘principle of neutrality,’ defined in the definitions of terms, is the abiding statute of this organization. This organization also seeks to promote the internet-based e-commerce business on a global scale.
1.2. Scope – To govern the e-commerce flow of products and services in a tax-free environment. The organization is grounded and supported by legislation at the country level (e.g. the U.S. Internet Tax-Free Engagement Act). The commission also ensures that complicated tax laws will not hinder the e-economy.
1.3. Authority – The commission’s laws act above and beyond the doctrines of the Internal Revenue Code. The organization is formulated on a series of agreed-upon laws by member nations that dictate the conditions for membership. Violations that threaten the promoting of a tax-free e-commerce-based economy are prohibited among member nations and constitute grounds for dismissal.
2. SECTION 2 (Definition of Terms)
2.1. Principle of Neutrality – “Rejects the imposition of new or additional taxes on electronic transactions” (U.S. Department of Treasury or http://www.ustreas.gov)
2.2. Cross-Border Transactions – An e-commerce-based transaction that takes place across one or more country boundaries.
2.3. Charged vs. No-Charge Services – Services and goods in e-commerce transactions can be accessed charges or can be free of charge, depending on the good or service and/or depending on the intention of the website owner.
2.4. Internet. - The collection of computer and telecommunication facilities, including operating software and equipment, which makes up the interconnected world-wide networks that use the Transmission Control Protocol/Internet Protocol, in order to communicate information of all kinds by wire or radio.
2.5. By Means of the World Wide Web. – The term “by means of the World Wide Web” means by placement of material in a computer server-based file archive so that it is publicly accessible, over the Internet, using hypertext transfer protocol, file transfer protocol, or other similar protocols.
2.6. World Electronic Commerce Organization - The World Electronic Commerce Organization (WECO), comprised of federal and local tax authorities from all participating Nations.
2.7. Electronic Commerce - The term `electronic commerce' means any transaction conducted over the Internet or through Internet access, comprising the sale, lease, license, offer, or delivery of property, goods, services, or information, whether or not for consideration, and includes the provision of Internet access. (The Internet Tax Freedom Act (formerly known as S.442, now Title XI of P.L. 105-277, the Omnibus Appropriations Act of 1998). http://rs9.loc.gov/cgi-bin/query/C?c105:./temp/~c105qkaBeR)
3. Section 3 (General Requirements)
3.1. Create a means by which Electronic Commerce on the Internet can be free of multiple or discriminatory taxes.
3.1.1. Reduce the overall burden on consumers due to state and local sales taxes by simplifying state and local tax systems, and reducing the aggregate collection costs of all transactions.
3.2. Provide incentives for joining the WECO.
3.2.1. Encouraging National and local tax authorities to simplify their sales and use tax systems.
3.2.2. To establish economic policy and fairness, all sales transactions on the Internet should be treated equally regardless of how the sale was transacted, whether it is in person, through the mail, over the telephone, on the Internet or by other means.
3.3. National and Local Tax Authorities should take the lead the developing and implementing sales and use tax collection systems that are fair, efficient, and non-discriminatory, which will simplify the process for the buyer and seller.
3.3.1. A uniform registration system for sellers
3.3.2. Uniform rules for transactions to particular tax jurisdictions.
3.3.3. A Uniform format for tax returns and remittance forms.
3.3.4. Uniform Audit procedures.
3.4. Protecting the privacy of consumers by minimizing the disclosure of personal information for tax collection purposes.
3.5. Identify barriers imposed in foreign markets on domestic companies engaged in e-commerce and the impact of such barriers on domestic consumers.
3.6. Collection and administration of consumption taxes on e-commerce in America and other countries.
3.7. Taxation, or its absence on all interstate sales transactions using the Internet and its impact on local, state, and national governments.
3.8. Examination of any proposals or models that seek to Tax or otherwise regulate Internet access, online services, and e-commerce.
3.9. Creating a level playing field for all entities engaged in the Business by means of the World Wide Web.
4. SECTION 4 (Specific Requirements)
4.1. Commission Membership- includes representatives of the federal governments; state and local governments as well as individuals involved in e-commerce, telecommunications, and retail and consumer groups.
4.2. Term Limits- An eighteen-month term, to explore the issues, determine a course of action and make any suggested legislative amendments.
4.3. Legislative Guidelines-
4.3.1. E-commerce should not be subject to additional or discriminatory taxes.
4.3.2. Business compliance and government administrative costs will be kept as low as possible.
4.3.3. Collection efforts will garner adequate tax revenue and attempt to limit taxpayer fraud.
4.3.4. Future legislation will be flexible enough to accommodate technological advancement.
4.4. Application to the WECO – Applicants can apply via the web site, or request an application via the web site or by phone. Applications can also be sent in by standard Mail. Notice of Receipt will be sent to the applicant. (Appendix-A)
4.4.1. Applicants must submit all of the requested information concerning their industry and business practices.
4.5. Approval/Rejection – The applicant must provide the necessary information to prove they provide a business or service by means of the World Wide Web. Failure to do so will result in rejected membership by the WECO.
4.5.1. Agreement to abide by the rules of the WECO must by signed by the applicants senior members prior to membership into the WECO. (Appendix-B)
4.5.2. Membership into the WECO is applicable in all participating countries.
5. SECTION 5 (Notification Requirements)
5.1. Quarterly Newsletter – Mailed four times a year to the governments of participating nations. Newsletter contains new legislation enacted at the country level that prohibits taxation of e-commerce transactions. Contains updated proxy and doctrine of the WECO and of the WECO’s purpose, scope, and authority as the impacts of globalization, international standards of e-commerce relationships, and B2B continue to evolve. It also details current global threats that might hinder tax-free Internet transactions.
5.2. Certificate of Membership – Mailed to participating nations upon receipt of annual dues and signed application materials (Appendix-C)
5.3. Certificate of Member Achievement – Mailed to participating nations who demonstrate achievement in the advancement of e-commerce in their geographies and/or marketplaces. (Appendix-D)
5.4. Notice of Violation
5.4.1. Violation Stage A – subject to fine; mailed within (2) weeks of violation (Appendix-E)
5.4.2. Violation Stage B – subject to hearing by random jury of member nations; mailed within (2) weeks of violation (Appendix-F)
5.4.3. Violation Stage C – subject to termination of membership; mailed within (2) weeks of violation (Appendix-G)
5.5. Notice of Penalty – see also Notice of Violation
5.6. Notice of Membership Termination – Restatement of discharge from the organization and of violation in stage C (Appendix-H)
5.7. Notice of Annual Meeting of Participating Nations – Mailed (3) months prior to annual meeting, held in Geneva, Switzerland
6. SECTION 6 (Relationship to Local Laws)
6.1. WECO Laws will supercede any federal legislation dealing with Internet taxation.
6.2. State regulations will be written to parallel the recommendations outlined by the WECO.
6.2.1. Complexity and lack of uniformity.
6.2.2. Unreasonable burden of compliance placed on existing government tax system.
6.2.3. Jurisdiction over enforcement at the State level.
7. SECTION 7 (Enforcement – Penalties and Liabilities)
7.1. Administrative Enforcement - The WECO, comprised of federal and local tax authorities from all participating nations will act as the ruling body. It will enact tax-free legislation at the country level (e.g. the United States’ Internet Tax-Free Engagement Act).
7.2. Penalties and Liabilities –
7.2.1. Violation Stage A – a participating nation falls into this category when they are in “minor” violation of the organization’s purpose and/or the organization’s best interests.
7.2.1.1. First violation-Warning and proof of compliance
7.2.1.2. Second Violation- Fines
7.2.1.2.1. Schedule of fines (Appendix I)
7.2.1.3. Expulsion from WECO
7.2.2. Violation Stage B – a participating nation falls into this category when they are in “serious” violation of the organization’s purpose and/or the organization’s best interests.
7.2.2.1. First violation-Warning and proof of compliance
7.2.2.2. Second Violation- Fines
7.2.2.2.1. Schedule of fines
7.2.2.3. Expulsion from WECO
7.2.3. Violation Stage C – a participating nation falls into this category when they are in “major” violation of the organization’s purpose and/or the organization’s best interests; may ultimately cause grounds for dismissal.
7.3. Failure of Compliance – A member nation’s continued failure to comply with either the commission’s purpose, the commission’s practice, or the nation’s own enforcement of its legislation deems ground for dismissal.
8. APPENDIX
8.1. Appendix A- Sample WECO application
8.2. Appendix B- Signature page from Agreement to abide by the rules of the WECO
8.3. Appendix C- Certificate of membership
8.4. Appendix D- Certificate of Member Achievement
8.5. Appendix E-G Notice of violation, stages A-C Violations
8.6. Appendix H- Notice of membership termination.
8.7. Appendix I – Schedule of fines for violation of WECO agreements
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