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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  • Little Brother

    Do you think this bad economy could be a setup so that big brother can take over this way? It wouldnt be the first time the economy was manipulated to this end.

  • http://www.fascistsoup.com/2011/05/04/california-proposes-hiring-private-firm-to-monitor-all-internet-purchases/ Fascist Soup » California Proposes Hiring Private Firm To Monitor All Internet Purchases

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  • wolf

    Boo Hoo. Sorry but you Californians keep electing the same Democrats year after year…Now you expect them to stop trying to tax you…I think it was MS Boxer who said the Libs in CA were vindicated after the last election since CA was one of the only states not to throw LIBS out…
    Maybe it is time to get rid of the libs for at least one cycle…

    • Johnnie

      not all of us here voted for these clowns. I will leave CA once my job leave the state. Could be soon….a lot of jobs are leaving the state.

    • KipNoxzema

      Well said. So goes the great experiment in Socialism.

      Next, they’ll try to censor the Press (Internet). Oh wait. They’re already trying that.

      Ok. Next they’ll try to start turning off your lights. Hmm. They already have the forced blackouts.

      Ok. I’ve got it. Next they’ll try to put everyone on assistance, like good little Russians.

  • http://informedreport.wordpress.com/2011/05/04/internet-police/ INTERNET POLICE ? « informedReport
  • Cainsanity

    Instead of California just SPENDING LESS and doing what’s right (like getting rid of the millions of illegals in this state, cutting off AID to the maFRAUDERS out there, limiting social programs) they want to penalize the people that are actually contributing to the economy. So typical of Kalifornia, address a symptom, but don’t solve the problem

  • gcblues

    consider firing half your public employees

  • Rick

    If you always do what you always did, you will always get what you always got. “STOP” voting for liberal Democrats whose only purpose in life is to tax and spend.

  • Nathan Alder

    It is so much easier to not buy from California businesses (less hassle) and costs of a great beach vacation are much lower in Florida. California used to be a nice place to visit but in recent years it is an expensive waste of money.

  • http://www.kansasprogress.com/wordpress/index.php/2011/05/04/california-considers-policing-internet-transactions-to-collect-online-taxes/ California considers policing Internet transactions to collect online taxes | The Kansas Progress

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  • Mikey

    Sadly California’s best days are behind it.

  • DavidW

    I guess my days of buying online from California will be coming to an end.

    • Boocho

      David… this is the part they don’t “get”. This could be the final nail in our coffin.

  • Boocho

    Hey, don’t poke fun of us Californians. Its is because of our commitment to our great country that we are willing to show the rest of the Country what the US will look like if you keep electing idiots, fascists and socialists (sorry to be so redundant). WAKE UP AMERICA, THIS COULD BE YOU!

  • joe

    Not only is it a great idea I think you should double the tax on internet sales to help pay for all your Mexican medical care, welfare payments and education.

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  • John Galtless

    We need to tax the air you breathe you freaks out there expelling CO2

  • Vote Loud


    I now refuse to purchase anything from a CA company…


  • Jerome from Layton

    Don’t Californicate [your state]!! First time I saw that bumper sticker was in Colorado, 1978.

  • Randy_Devil

    Board of “equalization”?. Just how Orwellian does that sound?

  • chris

    Holy smokes batman. If California wants to tax online sales they should just make a flipping sales tax on all items shipped to in-state buyers. Seriously, they are going to spend a ton of money to make an ineffective police force that will likely cost more than it takes, and just put a bunch of people in jail where they have to pay even more money to house them in corrections?

    No wonder people are moving out in hordes.

  • HooDatIS?
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