The follwoing few replies are taken with permission from Channel One,
the largest BBS system in the North East (its a RIMENet system) which
is suffering at the hands of the Massachusetts Department of Revenue
and which needs help.

The state is trying to claim non-existant taxes on them, including a
per-message post tax. If these goe thru they will affect EVERY modem
user in Massachusetts and eventually the Northeast (once the other
states discover they might get away with it) and trash bbsing in
general by the time they finish enforcing it.

Note that when these messages refer to SYSOP they are referring to
the sysops of Channel One (a husband and wife team in Cambridge MA)
and not myself or any sysop on this network.

===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-10-93 (02:17)             Number: 4312
From: JIM LEONARD                  Refer#: NONE
  To: ALL                           Recvd: NO
Subj: Fight Back-Modem Tax!          Conf: (16) MassModemT
---------------------------------------------------------------------------
   Hello Modem Users:  I've just read these posts about the State of
Mass. laying taxes upon the BBS known as Channel 1.  Part of the state's
plan is to use an unpublicized Use Tax schedule and charge back three
years worth of penalties to the tune of some $100,00.00.  The second part
of that state's planincludes an experiment involving a "message transfer
tax"  Every time a caller sends a message "ba-da-bing" goes the tax meter.
Contrary to many users' opinions,  THIS IS NOT A HOAX!

   I am here to ask every one of you to join me, in the formation of an
"International Association of Modem Users" (IAMU).  The goal is to provide
a vehicle that will collect and distribute information about "modem taxes"
and other issues that burden Sysops and Modem Users.   Together, as a
united association of "modem users", we can work together to protect our
right to "Free Speech".  Only as an organized and cohesive group, can we
repel the efforts of various local, state and national govt bodies to
implement similiar MODEM & BBS TAX MEASURES upon all of us.

            PLEASE DO NOT HESITATE TO JOIN ME IN THIS EFFORT.

It demands the full support of all Sysops,  Network Administrators,
Moderators and Modem Users.   This is a serious undertaking that will
require a lot of time and effort.

     The First Task is to solicit information from ALL OF YOU.  I need
to see and hear, that you,  as a modem user,   feel these issues are
important enough to donate some of your time and energy.  Unless YOU
are willing to help, this association will not succeed.

Consider the time and benefit you receive from your favorite Bulletin
Board Systems.   Consider the contacts you have made "on-line" and the
knowledge and ideas you have  shared electronically with others.   These
"freedoms" that many of us take for granted will become "luxuries" unless
we stake our claim to "Free Speech", today.

 If your local bell company had their way, you would be charged for every
word you type into your phone line.  And every local, state and federal
government tax collector would be right there to "get their share", right
off the top.   Why should they?   Do they deserve it?   Are they just
automatically entitled to make money off of your desire to communicate
with others?   NO WAY!

   This is YOUR world.  YOU have a right to say when and how and where
you allow the government to intercede.  If the FBI had their way, they
would have InterNet feeds coming into their central offices reading every
message you write.   NOW is the time for all modem users to unite as a
single entity to stop the intrusion and the taxation.  This association
has the potential of including millions of modem users, around the world,
from all walks of life.  The only common thread is a modem and a desire to
communicate with others without -outside- interference.

  Think about what has been posted here.  If you agree with anything
that is being said, then I urge you to communicate your thoughts to me and
to your local BBS and to other modem users that are part of your world.

Don't just stand around "thinking" that these "modem taxes" are a hoax or
a joke.   THEY ARE FOR REAL  AND  YOU ARE GOING TO START PAYING FOR THEM
UNLESS YOU ACT NOW AND ACT POSITIVELY TO DO SOMETHING TO HELP!

                My E-Mail Addresses via Internet:

       searchnet@delphi.com    or  72764.3012@compuserve.com

Or as "Jim Leonard",  on Channel 1 BBS.    To voice your concerns or to
register your support call  206-781-7754  (Seattle, WA - USA).    I will
add your name and E-Mail Address for electronic distribution of bulletins
concerning "tax modem" issues & to discuss how you can volunteer to help
fight these taxes.  Information you provide will be held in confidence
and will NOT BE RELEASED TO ANYONE ELSE, FOR ANY REASON - PERIOD.
                               signed,  James Leonard - August 6, 1993
-------------------------------------------------------------------------
IAMU-International Association of Modem Users-All Rights Reserved
(C)opyright-August 6th, 1993-James Leonard, Seattle, Washington, U.S.A.
-------------------------------------------------------------------------
MAY NOT BE COPIED FOR COMMERICAL PURPOSES.   May be copied in it's
entirety, for uploading to other BBS's and for Modem Users to share for
educational purposes only. s/James Leonard, searchnet@delphi.com
-------------------------------------------------------------------------


 * WinQwk 1.30 #0 * Unregistered Evaluation Copy
===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-13-93 (21:54)             Number: 4313
From: SYSOP                        Refer#: NONE
  To: JIM LEONARD                   Recvd: YES
Subj: COMMENT (57)                   Conf: (16) MassModemT
---------------------------------------------------------------------------
Jim,

Good to hear from you.
We'll try to get back to you on the items you asked about yesterday today.

  You mentioned to me in another message you wrote me earlier today
  that all the people you've talked to about this agree that the
  Massachusetts DOR is screwed.

  We feel this is ultimately what the whole thing boils down to.
  The Massachusetts DOR has been happily strong-arming and intimidating
  small businesses thru out the State for years, and then we wonder why
  Massachusetts is lagging the whole country pulling out of the recession!

  The MA DOR's operations depends on:
  1. Their IMMUNITY from frivolous claims.
  2. Incredibly mis-written and scrambled tax code which they present to the
     legislature.
  3. Giving meanings to the above that NO literate thinking person
     could conceivably read into the tax code.
  3. Putting one or two well-known but SMALL (i.e. defenseless) businesses
     under their VISE (since only large businesses can afford to take them
     to court) and getting the little guys to "roll over."
  4. Setting a new precedent by fear and example thereby for the whole industry
     at issue.

It's truly disgusting!

Other New England states (Connecticut comes to mind) have some of the
most regressive sales tax clauses on the books anywhere vis a vis
modem users.  At least CT is up front about it -- Connecticut's code
comes right out and taxes information databases.  Massachusetts code
as it is written explicitly exempts same --- but we have discovered,
the MA DOR is trying to get around the exemption by inventing absurd
"re-interpretations" of the code (at least until they get someone to
"fall" for it.)  Then they will have the precedent in their pocket
(or a dead industry) - depending on how you look at it.

Tess


PS: The Use tax is a prize example of a state tax (that may not be
    Constitutional) - written to apply to every RESIDENT, but neither
    publicized by the State nor enforceable -- EXCEPT to businesses and
    professionals -- most of whom, like the rest of the residents,
    unaware of the law's existence.... Auditing small businesses for
    "compliance" to this law has become a "pot of gold" for the MA DOR
    over the past few years as they collect the back tax with 18%
    interest, strewing bankruptcies and "closing our shingles to relocate
    in another State" in their path.  Channel 1 WILL survive this
    assessment, but it's another example of the generic evil in the system!
===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-12-93 (15:50)             Number: 4315
From: SYSOP                        Refer#: NONE
  To: ALL                           Recvd: NO
Subj: What the DOR is up to          Conf: (16) MassModemT
---------------------------------------------------------------------------
Folks,

We've been tardy to communicate to you what the DOR has been telling us
via the field auditor (who is the only person there who talks to our CPA)
during the latest round.

Since "Entering a message or messages" is a  telecommunications "transmission"
 (Don't ask me exactly how they pulled this out of the regs, but this is the
  focus of their case right now and a fine example what a full time staff of
  50+ lawyers  is capable of coming up with!), therefore

Channel 1 (i.e. any bbs or any "interactive" online service or by extension
any provider of access to the Internet) is a "telecommunications" transmittor.

As such Channel 1 should:

1. Stop paying the sales tax on its own 85+ telephone lines
2. Collect tax from that portion of its fees which is "entering messages"
   (This would be established somehow as a percentage of total revenue
    from the access fees and Channel 1 would have to figure out how to collect
    the assessment from its Members).

Our CPA (the sales tax specialist) has documented the folly and
impractability of accounting for this at Channel 1 -- 50% of the users live out
of state; e-mail uploads/downloads are unlimited i.e. not specifically charged
at all to Members; non-paying Members can enter messages; many Members never
read a message; many Members read only; etc. Assuming that it can be
established that say 3% of the activity on Channel 1 is specifically due to
Massachusetts residents who are paying Members uploading their Mail packets,
the DOR would collect less revenue from Channel 1 than they do now from the
collecting the tax on our phone lines.  Also that DOR's legal staff seems to
be ignoring that " message services except for beeper services" are
specifcally exempt from the sales tax in a late 1990 internal DOR document
SIC7389 clarifying for its personnel the status of sales taxable items as a
result of the 8.90 new regs. You figure....

Howbeit, you and we cannot fail to see the DANGEROUS precedent and
implications!  And why this alert continues to be very REAL.

It was about a month ago that the DOR communicated this "status" report -- the
field auditor said he'd be pre-occupied with other cases until August.  Now he
is on yet another vacation.... The DOR still refuses to talk to anyone in the
press about any of this and the press is reluctant to write anything without
getting the DOR's "point of view".  The DOR is tentatively developing its
"position" until the end of this year.  They ARE working on "revisions" to the
telecommunications regs - relentlessly looking for ways to cash in on the
information revolution.

The DOR is probably not going to decide for months whether to assess Channel 1
1. All of its access fees since it hasn't been billing customers as per above.
2. Come down with the "entering a message" assessment - to force court case
   or a precedent.  (I'm sure they assume that Channel 1 would
   "roll over" - since the court case would bankrupt us)
3. Decide that "message entering" on Channel 1 represents an inconsequential
   percentage of revenues that are already being collected via tax we
   pay on our phone lines.

Although some of these possible outcomes are better than others vis a vis
Channel 1's survival, the mindset behind ALL of them bodes badly.
The State has to clarify its economic policy looking ahead to the next century.
Right now, it's the DOR calling the shots!
===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-12-93 (16:17)             Number: 4316
From: BILL WOOD                    Refer#: 4315
  To: SYSOP                         Recvd: YES
Subj: What the DOR is up to          Conf: (16) MassModemT
---------------------------------------------------------------------------
Another concept that the DOR will have to invent a response to, id that
there is no fee for posting. Since this can be done by none members and
in fact is encouraged that non-members post, it is difficult to assign a
large portion of the membership fee to an activity available to
non-members. Members contribute to gain additional time, avoid ratios,
and, primarily, to keep good BBSes on the line. The last reason
approaches a gift or charitable contribution. Oh well, they are probably
working on an approach to taxing that. Do you wonder why Massachusetts
is home to so many tax exempt organizations?? We have to do *something*
and the are running the taxpaying organizations out with their attitude
towards taxation.

By the way, the communications use tax is on the books. This way anyone
receiving a taxable phone call in Massachusetts (i.e. any phone call not
made as part of basic residential service and on which a tax less than
that of Massachusetts was paid on the originating end) is liable for
filing a use tax return. Of course, the DOR would *never* enforce as
silly a law as this, that is, unless they want to destry you for some
reason. In that case, you are clearly violating the laws of the
Commonwealth, not paying your fair share.
===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-13-93 (17:59)             Number: 4317
From: SYSOP                        Refer#: 4316
  To: BILL WOOD                     Recvd: NO
Subj: What the DOR is up to          Conf: (16) MassModemT
---------------------------------------------------------------------------
-> By the way, the communications use tax is on the books. This way anyone
-> receiving a taxable phone call in Massachusetts (i.e. any phone call not
-> made as part of basic residential service and on which a tax less than that
-> of Massachusetts was paid on the originating end) is liable for filing a use
-> tax return. Of course, the DOR would *never* enforce as silly a law as this,
-> that is, unless they want to destry you for some reason. In that case, you
-> are clearly violating the laws of the

   Oh but they have enforced it in a rather big way recently on
   5 Boston Law firms!  Not all of the WESTLAW/LEXIS etc legal
   database services (ALL of which are located out of State) have
   been collecting Sales tax for the Commonwealth on their
   "leased" phone lines or "itemizing" their bills the way the State
   telecommunications law requires for the leased line access portion of fee.
   The State has not gone after    WESTLAW or LEXIS or whomever, as it has
   the right to collect however is more convenient for IT - the vendor
   or the seller.

   They've gone after a group of MA lawyers - said they should have been
   declaring the USE tax on all their database bills since 8.90 with the
   18% monthly compounded interest, and probably additional penalites
   in some cases.

   The lawyers met their match!  The burden of proof was on them
   They had to document EACH and every vendor's policy.
   Teach the DOR which vendors WERE billing correctly and collecting
   the tax on the telephone portion of their bill (i.e. where they HAD
   paid the telecommunications tax already) and where the vendors
   were ignoring MA regs requirements.

   And the the resolution has been that it is the MA lawyers who MUST pay every
   penny as per above where the vendors failed to collect properly.

   This case has been running concurrent with Channel 1's.
   It illustrates your point perfectly!
   It suggests that next, they'll go after every MA business's Compuserve
   account?
===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-12-93 (16:51)             Number: 4318
From: CHRIS DONNEGAN               Refer#: 4315
  To: SYSOP                         Recvd: YES
Subj: What the DOR is up to          Conf: (16) MassModemT
---------------------------------------------------------------------------
S >Folks,
S >
S >We've been tardy to communicate to you what the DOR has been telling u
S >via the field auditor (who is the only person there who talks to our C
S >during the latest round.


Has the EFF been of any assistance?

===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-13-93 (19:24)             Number: 4319
From: HAROLD DRABKIN               Refer#: 4315
  To: SYSOP                         Recvd: YES
Subj: What the DOR is up to          Conf: (16) MassModemT
---------------------------------------------------------------------------
BM>Channel 1 (i.e. any bbs or any "interactive" online service or by extension
BM>any provider of access to the Internet) is a "telecommunications" transmitto

BM>As such Channel 1 should:

BM>1. Stop paying the sales tax on its own 85+ telephone lines

Do does THAT mean that Channel1 is owed a refund of the sales tax on
it's phone lines since it's begining?

 þ SLMR 2.1a #843 þ F.I.A.W.O.L. because Fandom Is A Way Of Life.
===========================================================================
 BBS: Channel 1(R) Communications [ V.32bis ]
Date: 08-13-93 (21:49)             Number: 4321
From: SYSOP                        Refer#: 4319
  To: HAROLD DRABKIN                Recvd: NO
Subj: What the DOR is up to          Conf: (16) MassModemT
---------------------------------------------------------------------------
-> Do does THAT mean that Channel1 is owed a refund of the sales tax on it's
-> phone lines since it's begining?

   That's a really good point and the one that may persuade the DOR to
   maintain the status quo....

   As we MEASURE the online activity:
  "Massachussetts paying Member uploading messages on Channel 1"
   -- it is becoming clear that this constitutes a tiny amount of the total
   activity on the system.

   But it's anyone's guess what "spin" or "angle" the DOR will attempt
   to put on the "regs" next .....


