On The Money: Internet Police

Billion Dollar Plan Raises Privacy Concerns

By Mike Luery


SACRAMENTO (CBS13) — With California deep in debt, a controversial plan has emerged that calls for private vendors to monitor what you buy on the Internet.

The Board of Equalization (BOE) says it could raise a billion dollars a year in previously uncollected use taxes, but critics call it haunting to hire “Internet Police”.

One of those critics is Monique Bell, who started My Kid Sister Clothing Company, three years ago in Stockton.

“If you wear it, we sell it,” Bell told CBS 13 inside her Stockton home.

Bell is the owner of My Kid Sister Clothing Company, an Internet portal that allows her customers to find clothes for kids – and the whole family at a discount. She’s concerned by the BOE plan – a staff proposal to identify Internet buyers who use her site and others, to purchase things from out-of-state vendors.

“I think it’s like Big Brother. It’s definitely very chilling,” said Bell. The Internet entrepreneur told CBS 13, “I think our customers are just going to stop buying from us. We’re going to see a dramatic drop in sales.”

Under state law, if you buy something online from an out-of-state company with no physical presence here – since you are not paying sales tax, you are supposed to pay a use tax to the State of California, but many people never do.

That could change however, under the BOE proposal, which would authorize California to spend up to $10 million to hire private vendors to track down what you purchase over the Internet.

“This is just a fishing expedition as far as I’m concerned,” said George Runner, an elected member of the Board of Equalization.

Runner is fighting the Board’s staff proposal. CBS 13 asked him to explain how it was pitched to the Board:

“One of the ideas is well, we think there might be some people who will sell us data,” Runner warned about the proposal. “That will tell us what kind of credit card transactions or private transactions that a Californian may have made in purchasing something out of state,” he told CBS 13.

Under the plan, California could generate up to $1.1 billion in uncollected taxes by monitoring what you buy online. Anyone purchasing more than $5,000 a year would be fair game. But active Internet users like Dan and Amber Campbell of Sacramento worry about government watching over their shoulders.

“I just really think it’s an invasion of privacy and it should be back in the hands of the retailer, not the consumer,” Amber Campbell told CBS 13. Her husband Dan Campbell has similar concerns.

“It would kind of be more of a Big Brother type scenario,” Campbell told CBS 13 “And I really don’t feel like we need one more person watching what we do online or what we purchase.”

Keeping tabs on Internet purchases is so controversial the Board of Equalization has pulled the proposal from the calendar for now – and asked for further study.

“This item was pulled from the calendar for further review,” said BOE Spokesperson Anita Gore via e-mail. “It was not ready for discussion at the time it was pulled from the agenda and is not ready for discussion at this time.  There is no one available from BOE for an on-camera interview at this time,” she told CBS 13 in the statement.

California’s Use Tax law has been on the books since 1935.

Last year, the state took in more than $3 billion – but there’s still more than a billion dollars that go uncollected.

Send us your story ideas via e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at http://twitter.com/#!/mikeluery

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Comments

One Comment

  1. matt says:

    Well that will only hurt Cal Business.. What a Stupid Idea

    1. teaisstronger says:

      This will create more jobs for Blacks and Tans to prey on White buyers. Release the Black investigators. We all know whites cannot get any of those government jobs anymore.

      1. shazbat1 says:

        Pllease put away the race deck, and try to concentrate on the tax and spend madness of the great state of California. A literal cesspool of liberal activity that has driven the state economy into insolvency! God help you all, but you persist in sending the same nasty politicians to Sacramento, year after year/

  2. Hedley Lamar says:

    I don’t give a %^$#* how much sunshine they get, why would anyone want to live in that wretched state?

    1. teaisstronger says:

      I would sell California to Mexico or China. If China is willing to exchange California for what we owe them then do it. Those left wing communist in California would love living in a real slave state.

  3. Reid says:

    Many CA residents avoid sales tax online by using forwarding services from Oregon (where there is no sales tax). These services don’t affect use tax, but I wonder if the “internet police” will catch on? See http://bit.ly/fPJwNH

  4. sullinsea says:

    This is similar to what the DOR did recently up here in WA. There is one business in Seattle well known for shipping fine art. The DOR subpoenaed their customer records to find out who had brought art into the state without reporting an paying use tax. If I understand the article correctly, the Stockton website is not retailing – otherwise it would be required to collect sales tax from its CA customers. It must be linking to ouside vendors but have access to the transaction information. This actually sounds like a NY case where the tax collectors tried to say out of state vendors had nexus because of instate websites driving traffic to them. I thought NY lost that case. Eventually there will be a solution to this. It’s just a matter of finding a way that meets the nexus requirements of the Constitution and is not overly burdensome on out of state vendors in terms of compliance costs. These articles never touch on what a nightmare it would be to gear up for compliance with not only 40 some states, but in many states multiple local jurisdictions as well.

  5. sullinsea says:

    Why not have the delivery companies or USPS collect the sales tax for the state at the point of delivery? No nexus issue there.The vendor could include an invoice and either the delivery person could collect on the spot or file the invoice with the state tax authorities in the state of delivery.

  6. klesb says:

    Will cars be searched at the CA borders, will air travelers have to go through CA Customs inspectors? Will those Customs inspectors tax the illegals and drug cartels at their border with Mexico? Will anyone in CA be able to afford to buy anything the way their employment/unemployed ratio is going? Will endangered species be taxed to compensate the State for the reduced revenues they are causing?

  7. Roger That says:

    Stupidest thing of the day.

  8. Alan says:

    There is a spending problem not a revenue problem. CA is losing thousands a businesses a year and tax the citizens at %50 clip already. Until the residents stop electing Democrats this will continue to happen. This is a one party state in the hands of its public employees and unions. Have fun. BTW the credit card companies already offer a lower rate for devulging zip code information to the government.

    1. at says:

      Agreed, except I would say there is a revenue problem in that CA taxes are way too high.

  9. Joshua Darlington says:

    Every mom and pop business in CA collects sales tax. Why not the big internet Wal Mart stores. They are using tax evasion to get an unfai competitive advantage over local brick and morter stores. If they have a good business model they shouldnt need to act shady to make a profit.

    1. Sam Smirk says:

      When you elect democrats, you get what you deserve. It pleases me that California is running businesses out of state, all the better for the states to which those businesses migrate. Happy bankruptcy… behold the fruits of liberalism!

    2. Alan says:

      Walmart already pays tax in every state and would welcome an internet tax to give them an advantage, You have this backwards!

      1. Newbern W Johnson says:

        Wal_Mart BIG!
        BIG EVIL
        WAL-MART EVIL.
        Wal-Mart is simply using the current laws to it’s advantage, just like any other business.

  10. BillyBob says:

    Please let me know when this starts and how they will track my purchases so I can figure out another way to keep the greedy politicians hands out of my pocket!!!

  11. Kathleen says:

    Give credit where credit is due. The Mexicans have successfully turned CA into a clone of this corrupt, filthy, and lawless country. Let’s purge America of all illegal aliens, send them to CA, and turn it over to Felipe Calderon, Jorge Ramos, Reuben Navarette, Luis Gutierrez, and LaRaza with the caveat that they never, ever have any contact whatsoever with the U.S.and its citizens. We can then wallow in the satisfaction of watching all the anti-American Latino activists chanting, “God help you if you get what you want.”

  12. Wonder Woman says:

    Ha!! Ha!!! Ha!!! Hey America, how’s that New World Order and Policed State working out for ya. I have bad news America, It’s going to get worse, and worse, and worse. Just remember, this massive security grid that’s being set up is to protect you from little men that live in caves, Oops sorry million dollar estates, just know that when the U.S. Dollar Collapses, this massive security grid won’t be used against you.
    Velcome to AMERIKA

  13. Quick Fix says:

    Use Tor browser as it blocks any of this stuff from happening. Search for Tor browser. Their plan is done and over with this software. The BOE would have to obtain the info elsewhere.

  14. Tomcat says:

    Err what about direct mail sales they do not all collect out of state taxes

  15. troy says:

    Of course they should be reported on after all every dime that someone makes from working belongs to the government. Its kind of like the government cant afford to give tax breaks because after all, all money generated belongs to the government. In fact our pay checks should just get sent to the government and then they couls send us back a few hundred bucks a month to pay our bills. work slaves work.

  16. Aunty M says:

    The BOE should just stop trying to get our money. Don’t they understand that we in California are getting more broke every day!
    These people in Sacramento have no shame. Instead of cutting services all they know how to do is tax, tax, tax!

  17. at says:

    Let’ get rid of the use tax

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