Federal and state governments wrestle with cybertaxes.

• Jurisdiction: United States
• Date: 01 October 1997
• Author: Margaroli, Richard

The advent of the Internet, while opening up the world to enormous treasures, has also brought with it a multitude of unknowns. Federal and state governments have found this out firsthand, as they wrestle with how to tax transactions not only originating, but also culminating, on the Internet.

In the pre-Internet world, a service was taxed where it was rendered. But where is the transaction taxed if a consultant offers his services over the Internet? Is the transaction taxed where the information is posted to a Web page, where the information is downloaded from a Web page, or where the computer serving the Web page is located?

The answers to these questions, while currently unknown and in need of clarification and guidance, have both interstate and international tax ramifications. Indications from Treasury are that it would prefer to open such issues up for discussion...