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Internet Jurisdiction

Like most Americans, I spend a lot of my life on the Internet. My “day job” is in I.T., I run my own web site (Scott Bradford: Off on a Tangent), and I’ve built a few other web sites and web applications over the years. The web sites that I have built were made in the United States, and are hosted in the United States.

But, of course, they are accessible from other countries. That’s how the Internet works. And other countries have their own laws and regulations affecting the web. Am I bound by European Union (E.U.) laws because E.U. citizens visit my web site?

The correct answer is “no.” If my web site complies with the laws in the place where it was built and published — the U.S. — then it’s in the clear. But the E.U. asserts that its rules, even dumb ones like the General Data Protection Regulation (GDPR), apply to any web site that is visited or used by people in the E.U. They have no authority over me, but they claim that they do. Does Canada have authority over my web site too? How ’bout North Korea?

This poses a problem even inside the U.S., because each state is sovereign over its domestic affairs and can make its own laws. Normally this is fine. But, for example, most states assert an authority to charge sales tax on online purchases made by their residents, even when the web site they made the purchase from is in another state. Amazon and other big businesses can comply fairly easily, but this puts an unrealistic burden on small businesses. If I sell quilts in Virginia, I shouldn’t have to learn and comply with all fifty states’ rules to start selling online…and I definitely shouldn’t have to learn and comply with the rules in every country in the world!

This is a legitimate interstate and international commerce issue, and it’s time for the federal government to step and and define — in a fair and consistent way — which one location’s rules hold sway over online transactions. There are many ways to do this. For a product purchase, it could be the location of the business, the physical location of the server on which the transaction occurred, or the location of the person making the purchase. Pick one, and only one.

The least burdensome way of doing this would be to define the location of an Internet transaction as the location of the business or publisher. So my web site, published from my home in Virginia, would be bound by Virginia and U.S. law…and no other states’ or countries’ laws. And for a business, it would be the primary location of that business.

Using Amazon as our example, they are located in Washington state. Currently, if I make a purchase on Amazon in Virginia, I am charged Virginia sales tax. But the purchase did not necessarily actually occur in Virginia. Physically, it occurred on a server in some server farm somewhere. For the purposes of jurisdiction, the federal government should declare that it occurred at the location of the business — Washington state — and it is Washington’s laws that should dictate how Amazon handles them and what taxes they charge.

Why? Because the analog equivalent of my digital purchase is that I traveled to Amazon and bought something in their store and then brought it home. It’s like if I hopped in my car and drove from Virginia to a specialty shop in Pennsylvania, bought something there, and brought it home with me. I would pay Pennsylvania sales tax, not Virginia sales tax. The same would apply if I just called that shop on the phone and made a purchase that way and had it shipped. And the same should apply (but currently doesn’t) if I make that purchase online.

Even if we decide to go the other way with it, fine, but we need a clear definition. the important thing is that we need a federal regulation — under its interstate and international commerce authorities — to define these things one way or another. And the U.S. government should assert its own authority and make it clear that U.S. businesses and individuals are not bound by any foreign laws when they are operating in the U.S., and take whatever steps are necessary to prevent foreign powers from attempting to assert any such authority.