Monthly Archives: May 2014

Why E-Commerce Should be Taxed

Taxation of online transactions is currently a hotly debated issue in the E-commerce world, as well as in the judicial system. Before online transactions were commonplace, the rule was that if you lived in a state with sales tax, you paid sales tax on your transactions. If you lived in a state without sales tax then you were exempt from paying the sales tax. The internet has gone and complicated yet another good thing, of course.

Now, retailers who sell goods and services online have to be very careful. If they have a physical presence (aka Nexus)  within the state their customer is ordering from, and that state has a sales tax, then they can charge sales tax on the transaction. If they are engaging in a transaction with a customer from a state where they have no Nexus, then they do NOT have to collect sales tax (http://www.sba.gov/content/collecting-sales-tax-over-internet). Little did I know, before researching this subject, that in these cases, the customer is responsible for still paying that tax, except it isn’t considered sales tax, it is then called “use tax“. Definitely worth looking into so the IRS doesn’t come after you!

Statistics show that in 2013 the United States lost nearly $23 Billion in uncollected sales tax. (http://www.ecommercetimes.com/story/79544.html). In 2012, Washington State alone had $281,900,000 worth of uncollected sales tax due to online transactions (http://www.ncsl.org/research/fiscal-policy/collecting-ecommerce-taxes-an-interactive-map.aspx). “Sales taxes account for over a third of revenues for most states, including over half of tax collections for six states.” “With nearly every state still facing budget shortfalls, this revenue could help fund police, school teachers and other much-needed programs.”(http://www.ncsl.org/research/fiscal-policy/collecting-ecommerce-taxes-an-interactive-map.aspx). So tax reform is upon us once again, and this time it’s taking on E-commerce.

“The U.S. Senate voted May 6, 2013 to approve the Marketplace Fairness Act (MFA), S. 743, by a vote of 69-27. The NCSL-supported legislation is now before the House of Representatives’ Judiciary Committee for consideration. The MFA authorizes states that adhere to certain simplifications to require out-of-state retailers that have more than $1 million a year in out-of-state sales to collect and remit that state’s sales taxes. The legislation also requires states to provide software to online retailers free of charge and removes any liability from the retailer should the software malfunction” (http://www.ncsl.org/research/fiscal-policy/collecting-ecommerce-taxes-an-interactive-map.aspx). The MFA is being championed by many retailers, as well as The National Governors Association, the National Conference of State Legislatures, and the National Retail Federation.

At the same time, there are several larger business such as Ebay and Etsy, that feel that the MFA is going to ruin things for their independent sellers. The sellers don’t necessarily meet the $1M a year cap that the bill imposes, and in the bigger picture, this could take a huge bite out of profits.  Another issue opponents cite, is that the bill is not nearly as detailed as it needs to be to adequately attend to the needs of each and every business it covers.  Additionally, the software requirement does not completely remove the necessity of having a human being processing all the complicated sales tax issues each business will face. This means that more funds will be allocated towards new positions, and in turn, there will be smaller profits for companies (http://marketingland.com/online-sales-tax-whyecommerce-companies-are-on-both-sides-of-the-debate-43395).

As much as I’d love to not pay sales tax on internet transactions, I really think that given all the evidence available, the smartest thing to do is to find a way to require and regulate sales tax be paid on online purchases. The MFA can be amended down the road to cover all potential issues that arise, and the long-term effects of the bill being put into action will help bolster our nation financially.  If you’re looking for a way around paying sales tax, you can find one if you do your research. Otherwise, every time you see those extra dollars on your bill, just think about how you’re contributing to our economy’s growth!

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Does E-Commerce Need Social Media?

Social networking sites like Facebook, Twitter, and Instagram each have millions of users, so it seems logical that E-commerce businesses would jump at the opportunity to utilize them for marketing purposes. Many companies have done just this, and have seen mixed results in their ROI in social media. This begs the question: Is using social media integral to the success of E-commerce businesses?

In my search for answers, I came across relatively few articles that were in favor of returning to the Dark Ages of advertising. Even the ones that featured negative reviews of using social media for marketing, came around by the conclusion and admitted that they were better off having attempted a foray into the world of Facebook than not taking the chance.

One such article focused mainly on the fact that social media might not be the best platform for smaller businesses, because it is harder to generate business when nobody has heard of you before. According to the article, “About 61% of small businesses don’t see any return on investment on their social-media activities, according to a survey released Tuesday from Manta, a social network for small businesses.”  Apparently, a lot of small businesses make the mistake of jumping on the trending wagon and attempt to use only social media, rather than stick to a marketing mix they know works for them.

Many of these people are not social media marketing pros, they just assume that since everyone else is doing it, it must work. They don’t necessarily have the know-how or skills to use the analytic software offered by these sites, to help them determine how effective this new method is for their business. Additionally, studies have shown that “despite the popularity of using social media for marketing purposes, less than 1% of traffic to the [E-commerce] sites came from social network sites.” If this is true, then why is the use of social media still so prevalent with E-commerce businesses? Let’s take a look at why it is still such a popular trend.

Bitcoin: the Next Generation of Virtual Currency?

For those of you unfamiliar with Bitcoin, allow me to explain in layman’s terms what exactly I am referring to. Bitcoin is a form of unregulated digital currency created by an open source software (accessible to and editable by anyone) developer named Satoshi Nakamoto in 2009. There is some speculation as to who exactly Satoshi Nakamoto is, and many theories focus on the idea of the name being a pseudonym for a group of developers, instead of an individual. How exciting and mysterious!

There are several ways to get Bitcoins. You can buy or sell them with real currency on a Bitcoin Exchange, transfer them from one person to another using mobile apps or computers, or “mine” for them by using your computer to solve intricate math puzzles. Every time the computer solves a problem, you are rewarded with Bitcoins, which then are transferred into your Digital Wallet (virtual bank account) for safekeeping. This process is referred to as “Bitcoin Mining”.

Bitcoin can be used by anyone in the world with internet access, and competes with other forms of digital currency like Dogecoin (Twitter’s version) and Reddcoin (Reddit’s version). Essentially, digital currency gains value as more and more people utilize it, like a stock, so some people choose to invest their money in Bitcoins, hoping the value will increase.  Bitcoin uses no third party, so there are no transaction fees, which appeals to small businesses. Also, you are not required by anyone to verify your identity at any point during the transaction process, which appeals to anyone wishing for anonymity. There are many other reasons to use Bitcoin as well.

As novel and handy a system as this is, I have to wonder if it will cause some political issues down the road (if it isn’t already?). I can only imagine that with the ease of use of the Bitcoin exchanges, money transfers are happening stateside that involve criminal activities, probably on a daily basis. Because of the nature of Bitcoin – deregulated currency and highly anonymous transaction system – this must pose quite a problem for the governments of the world if they are trying to crack down on international crime. On the other hand,  if any particular government decided to suddenly ban Bitcoin from use in their country, it could potentially create a steep decline in Bitcoin value. As long as politics and Bitcoin don’t come head to head, I think the value of Bitcoin will continue to increase as it becomes more popular.

At this point, having learned quite a bit about Bitcoin recently, I may choose to invest in it after a period of observation. I believe that at some point in the next 50 years or so we will have developed some form of global currency, and it will most likely be digital. Bitcoin may be its great Granddaddy, or it may be the Beast we’re all trading with 50 years down the road. Either way, if it continues to  grown in popularity, and in turn, in value, I don’t see how it will disappear anytime soon. So…let the mining begin!

 

 

The difference between Malware, Viruses, Worms, and Trojan Horses. Plus, What’s a Backdoor?

There are so many different ways to infect a computer with malicious programming, and so many different terms to keep straight! Here is a simple breakdown to help you understand the basics.

1. Malware is a broad term used to refer to any type of malicious code. It can be a Virus, Worm, Trojan Horse, etc.

2. A Virus acts just like a biological virus. It has the ability to replicate itself and spread throughout your computer, infecting the whole thing and potentially causes irreparable damage if you don’t remove it quickly.

3. I like to think of Worms as Super Viruses. They are not contained to one computer, but can travel between computers on a network and infect multiple machines.

4. Trojan Horses are pretty much self explanatory. They were named for the story of the Trojan Horse, where an entire army hid inside a large wooden horse, and once it was wheeled into the enemy’s city, they jumped out and had the upper hand in a vicious attack. This form of Malware is disguised as a harmless code, but once it is in your computer it acts maliciously.

5. A Backdoor is something computer programmers use to access programs remotely, usually for updating or maintenance reasons.  However, sometimes these Backdoors can be used by hackers to gain access to your system for nefarious purposes. Some Malware will have backdoors built into their codes, so that once your computer is infected, the hackers will be able to remotely access your system

Identity Theft on a VERY Personal Note

Today my home was broken into, and multiple personal documents were stolen from a lock box. Social security numbers, birth certificates, a house key, and other irreplaceable items are now floating around out there in the big, bad world. The feeling in my stomach is one of I don’t wish on anyone I care for.

It’s scary enough that someone came into the house in broad daylight, while somebody was home even, but the fact that they targeted only our personal identification papers (and some random pieces of jewelry), but left valuables like the nice TV, several laptops, an Xbox, and other assorted items of value, is what freaks me out the most. It made me realize that in this day and age, our identities are sometimes worth more than the things we spend the most money on. 

Being a researcher by nature, I immediately went online (after we filed a police report) to see what else I could do to protect myself from Identity Theft. This website has a bunch of helpful tips for those of you who aren’t familiar with the topic, and I have since followed up by taking several precautions. I even went so far as to notify Experian just in case someone tries to use my information to open a new line of credit. 

It has come to my attention now that there are more malicious forms of cyber ID fraud than I had ever imagined. Unfortunately, it took having my home broken into for me to realize just how prevalent this type of crime has become all over our country. According to the Seattle Police Department, “Identity theft is one of the fastest growing crimes in America.” Now, in addition to vigilantly locking our doors and taking part in the Neighborhood Watch, we have to worry about crazy people stealing passwords to our email accounts, online banking services, and literally anywhere else personal information is stored online. Scary, huh? 

Hackers use the stolen information in a myriad of ways, too. They can sell your data to companies for marketing purposes, use your bank accounts for personal purchases – which may put you in a serious financial quandary or ruin your credit, apply for jobs or student financial aid using your identity, or even commit crimes that will be tied to you. These are just a few potential consequences of identity theft. 

This type of crime seems so trivial when it isn’t happening to you. Just the name “identity theft” is a little silly (there’s even a movie that makes fun of this situation), but the harsh reality is that this is happening all around us, on a daily basis. There are only so many precautions we can take, and NOBODY is 100% safe. So, change your passwords frequently, don’t give out your personal information unless it’s on secured sites (even then, be cautious), and for the love of Pete Carroll, lock your doors people!