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Clouds Continue To Rain State Tax On Retailers

As you may remember, this past January, Rimon presented a teleseminar entitled: State Tax Update: States Can Be Taxing in a Digital World, led by Dan Dixon and Kelley Miller, who are leading the charge in keeping clients informed as the worlds of cloud computing and state tax converge – or perhaps we should say “collide.”

Increasingly, states are scrutinizing the operations of cloud providers and their cloud-related business activities as they seek ways to force online retailers to collect sales tax from customers. Dan and Kelley have become recognized leaders in this area, closely monitoring all 50 state tax departments within the United States, and the dynamically evolving landscape. Dan and Kelley continue to assist clients, speak and write about new state tax developments, and have been quoted in a variety of media sources, including BusinessWeek, The Wall Street Journal, Forbes, NPR, NetworkWorld, E-Commerce Times and The Hartford Courant.

Dan and Kelley have prepared a recent Rimon Client Alert, entitled “The Wall Street Journal, Forbes, BusinessWeek and Fortune 500 Companies All Agree: No One Knows Taxing the Cloud Like Rimon State Tax!” You can read the full alert online “Cloud Computing is Taxing (Web)”, or you can download a PDF version “Cloud Computing is Taxing (PDF).”  As you may also recall, in 2010 Rimon launched a cloud computing initiative, commissioning a series of individual white papers, now compiled into a comprehensive work entitled, “Transcending the Cloud: A Legal Guide to the Risks and Rewards of Cloud Computing.”

For more information regarding this alert or to stay on top of the developments in state taxation related to cloud services, products, and platforms, from Rimon lawyers who really know this area, contact Dan Dixon or Kelley C. Miller directly. Of course, you can always find out more about our Cloud Computing initiative or get the assistance you need by contacting me, Joe Rosenbaum, or the Rimon attorney with whom you regularly work.

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Trending Towards Service of Process via Facebook!

This post was also written by Lisa Kim.

Just a few weeks ago Legal Bytes updated its reporting (which has been going on since 2009) noting that the U.S. District Court for the Southern District of New York in Fortunato v. Chase Bank USA (S. D.N.Y June 7, 2012) declined to permit a plaintiff to effect service of process on a defendant via Facebook (see, Service of Process by Facebook? Not Just Yet!). However, it seems that legislators and courts alike are opening up to the idea of allowing service through social media where it would be reasonably likely for the defendant to receive actual notice. In the fast-paced world of digital technology and social media, the courts are indeed moving just a wee bit faster (do they have a choice?).

Last month, Rep. Jeff Leach, R-Plano, introduced a Texas bill (H.B. 1989) that would allow courts to approve the use of substituted service of process through a social media website. Specifically, this law would allow the court to prescribe substituted service through a social media website if: “(1) the defendant maintains a social media page on that website; (2) the profile on the social media page is the profile of the defendant; (3) the defendant regularly accesses the social media page account; and (4) the defendant could reasonably be expected to receive actual notice if the electronic communication were sent to the defendant’s account.”

Similarly, last week, in FTC v. PCCare247 Inc., S.D.N.Y, the U.S. District Court for the Southern District of New York granted the Federal Trade Commission (FTC) permission to effect service of process (although not the summons and complaint) via Facebook and email upon five defendants based in India.

In the PCCare247 case, the FTC alleged that the defendants operated a scheme, largely out of call centers located in India, that tricked American consumers into spending money to fix non-existent problems with their computers. FTC served the defendants through the Indian Central Authority as required by the Hague Convention and also sent the summons and complaint to the defendants via email, Federal Express, and personal service via a process server. Although the Indian Central Authority (after more than five months) still had not responded to the FTC confirming that defendants had been served, the defendants received notice through the process server.

The request for service of process via Facebook and email came into play later when the FTC requested permission to serve additional documents on the defendants. The court granted the motion, holding that service via email and Facebook are not prohibited by the Convention or any other known international agreement. In addition, the court held that service via email and Facebook comports with due process as the FTC demonstrated the likelihood service via email and/or Facebook would reach the defendants. The court cited the fact that email addresses for service were used for various tasks in the alleged scheme to defraud consumers and defendants had used some of the emails to email the court.

The common thread between the Texas Bill and PCCare247 appears to be the high likelihood that service through these electronic means would give actual notice to the defendant. Indeed, in distinguishing Fortunato, the PCCare247 court specifically noted the FTC provided the court with “ample reason for confidence that the Facebook accounts identified are actually operated by defendants.” The Facebook accounts had been registered with email addresses known to be the email addresses of the defendants; the defendants listed their job titles at the defendant company as professional activities on their Facebook accounts and two of the defendants were shown to be “friends” with a third defendant.

The evolution of judicial precedent and thinking in this area will not only be interesting to watch but may also transform the manner in which the law, the courts and judicial systems around the globe confront and attempt to deal with legal professional and ethical issues (see generally, Friends on Facebook – Hold Them Close, Get Held in Contempt of Court!) Social media and technology, wired and wireless, continues to challenge every industry and profession and neither the law nor the legal profession are immune. Don’t hesitate to contact Keri Bruce, Lisa Kim if you want to know more about these issues, and, of course, you are always free to contact me, Joseph I. Rosenbaum, or any of the attorneys at Rimon with whom you regularly work. We would be happy to help.

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Mississippi Ratifies the 13th Amendment – Thanks ‘Lincoln’

To be honest, I wasn’t sure whether to post this directly on the Legal Bytes blog as a news item or list it under Useless But Compelling Facts. But the news won out.

So now it is official and perhaps an illustration of how life can imitate art – in this case the motion picture “Lincoln”, directed by Steven Spielberg. You can now add to the list of things for which the film, a brilliant characterization of Abraham Lincoln’s efforts to formally abolish involuntary servitude for all time, can take credit: the correction of an oversight for 18 years and perhaps the confirmation of an act that was 130 years in the making in the state of Mississippi.

As our story begins, Dr. Ranjan Batra, an associate professor at the University of Mississippi Medical Center, decided to do some fact-checking after viewing the movie. Curiously, it seems, he discovered that Mississippi had not legally effected the ratification of the 13th Amendment to the Constitution of the United States – the Amendment that abolished slavery in the United States.

Now in case you are wondering how this could be, a little legal procedural history is in order. In December 1865, three-fourths of the U.S. states ratified the 13th Amendment to the United States Constitution – a number sufficient to make the Amendment officially part of the Constitution. At the time, a number of states did oppose the Amendment – Mississippi among them. In the ensuing years after the Civil War ended, all of the remaining states eventually did vote to ratify the Amendment. Indeed, the Mississippi legislature voted to ratify the Amendment in 1995! But in order to make it official, the state was required to notify the U.S. Archivist of the passage of the resolution – and through some oversight, Mississippi never did so.

Well, Dr. Batra spoke to a colleague, Ken Sullivan, who in turn contacted Delbert Hosemann, the Mississippi Secretary of State. Secretary of State Hosemann, recognizing the oversight, sent a copy of the 1995 Mississippi resolution to the Office of the Federal Register January 30, 2013. According to published reports, on February 7, 2013, just more than a month ago, the Federal Register wrote to the state of Mississippi confirming that “with this action, the State of Mississippi has ratified the 13th Amendment to the Constitution of the United States.”

Now isn’t that better than an Academy Award?

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Identity Theft? Victim and Alleged Thief ID Each Other.

Digital or Analog, identity theft is frightening, anxiety provoking, and tedious – even if you aren’t in danger of losing money or at risk of physical injury. But it’s often not that simple – for the victim or the perpetrator. As an Applebee’s waitress in Lakewood, Colorado, found out, identity theft in the real world can be more frightening than digital theft.

A few weeks ago, the waitress, Brianna Priddy, while out with some friends (not while working), apparently lost her wallet with all of her credit cards, her checks, and her driver’s license, as well as the cash. She dutifully went through the time-consuming and sometimes frustrating process of calling, writing and notifying everyone she could remember, alerting them to stop transactions that may involve the lost instruments and identification, and asking for replacements. Not fun. Even when her bank called, alerting her to forged checks being issued, she probably resigned herself to living with some frustration, anxiety and pain for a while. But if you think digital identity theft is frightening, read on.

Fast forward, Ms. Priddy is now back at work, waiting tables. A group of young people at her station order drinks. She asks for ID. How amazing to find that one of the women at the table ordering a drink is none other than herself! Cloning? Not really. The woman in the group had offered the victimized waitress’ ID as proof, and I confess she must have been a lot calmer than I would have been. She didn’t let on and, according to reports, said to the patron, handing her back the ID, “I’ll be right back with your Margarita." The waitress called police and despite what must have been a nerve racking eternity, she tried to appear calm and collected waiting for the police to arrive. They did and promptly arrested the woman patron on suspicion of theft, identity theft and criminal impersonation.

Not all criminals are as unwitting or as helpful as the alleged thief in this case. Not all identity thieves are that cooperative, even by accident. Most digital identity theft, compromises of personally identifiable information, and data breaches are more complex, and involve more than one individual and often cross-state and national borders – with multiple statutory and regulatory schemes that apply to you, the “victim.” Rimon has an entire group dedicated and experienced to help companies deal with identity theft – from preventive policies to defense of legal rights with respect to consumers and regulators. If you need more information about the complex legal and regulatory involved, contact me, Joseph I. Rosenbaum, or the Rimon attorney with whom you regularly work.

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Useless But Compelling Facts – March 2013

This Useless But Compelling Fact question is a North American geographic conundrum in two parts.

First, on a standard U.S. English language keyboard (QWERTY), what is the only State in the United States that can be typed using letters on only one row?

Second, when one looks at a map of the United States, name the States that are the farthest North, South, East and West.

Good luck!

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Useless But Compelling Facts – February 2013 Answer

Last month, on an arts & sciences theme, we focused on science and asked you to identify the scientific discovery associated with February 18th that was subsequently overturned in 2006. We asked you to tell us what the discovery was, who discovered it and what happened?

Guess who was first with all the right answers! None other than good friend, long-time Legal Bytes reader and a senior executive with the American Association for the Advancement of Science (AAAS), Mark S. Frankel. Congratulations.

Mark correctly told us that while Pluto, the ninth planet in the solar system, was discovered by American astronomer Clyde Tombaugh on February 18th, Pluto was recategorized as a dwarf planet and ‘plutoid’ in 2006.

Runner-up kudos goes to another friend and loyal reader, Samuel J. Dressler; who was a friend growing up in Washington Heights, a fraternity brother in university and remains a distant friend to this day. Sam noted that the name Pluto was first suggested by an 11-year-old English girl named Venetia Burney. The suggestion fit with the unofficial practice of giving planets the name of a Roman God (Pluto is the Roman God of the underworld). Coincidentally the name starts with the initials of the Planet X crusader, Percival Lowell, among other things, an astronomer best remembered as a key proponent of the notion that there were canals on Mars, founder of the Lowell Observatory in Flagstaff, Arizona and who is widely credited with being responsible for starting the work that ultimately led to the discovery of Pluto 14 years after his death. Thank you Samuel!

I can’t resist also giving an honorable mention to another good friend, David A. VanderNaalt, one whom I have known since my days at American Express, for sending me this:

 

Thanks Dave!