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Welcome to our March 2013 Newsletter!  Please take the time to read the article and contact us should you have any questions or concerns.

 

Law Offices of Salar Atrizadeh

Operating an e-Business and Related Considerations

Any business that operates over the Internet, even in part, is subject to various state, federal, or international rules and regulations.  An "e-business" or "e-commerce" has been a very resourceful and beneficial means of conducting business. For instance, companies are now able to advertise and provide goods and services to customers all over the world by using the Internet.  However, in order to ensure continued economic progress, an online business must consider the applicable rules and regulations. Furthermore, it is important for any business to note pertinent laws because certain and cognizable standards may affect its operations even it does not maintain an online presence.

 

For example, e-businesses should be concerned about the creation of enforceable electronic agreements.  Although, E-Sign, the Uniform Electronic Transactions Act (UETA), and recent decisions make it probable that click-wrap agreements will be enforced, retailers should ensure that click-wrap and similar electronic agreements comply with applicable laws.  In addition, cyber agreements (i.e., agreements that are formed on the world-wide-web) can be undermined by inconsistent laws that govern contract formation in the related jurisdiction.  In recent years, certain rules have been implemented to ensure the validity of electronic contracts.  For example, the United Nations Commission on International Trade Law (UNCITRAL) has adopted the Convention on the Use of Electronic Communications in International Contracting, which seeks to remove the impediments of using electronic communications in international agreements.

 

In general, the United States has led the development of an uncensored Internet, but American companies that conduct business online (i.e., e-commerce merchants) are facing regulations of other countries, specifically the European Union.  Similar to treaties, European Union directives constitute a multinational step to regulate trans-border policies and procedures.  

 

As always, the government is concerned about reduction in traditional tax revenue system due to the growth of e-commerce.  As such, many jurisdictions have attempted to apply traditional tax structures to e-commerce transactions.  Important national efforts related to taxation of e-commerce transactions include: (i) the Internet Tax Freedom Act (ITFA); and (ii) the Streamlined Sales Tax Project (SSTP).   The ITFA was designed to prevent creation of new taxes on e-commerce transactions.  The SSTP is an interstate effort to simplify sales and use taxes.

 

In general, traditional tax structures are applicable to tangible properties (e.g., manufactured products).  However, digital products that are bought and shipped online (e.g., e-books) provide unique tax policy issues regarding  where the product is purchased and where income is earned.  At this time, the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD) are seeking to resolve international e-commerce tax policies.

 

In essence, self-regulation consists of trustmarks and international alternative dispute resolution.  International business and consumer organizations are looking into methods to enhance self-regulation of e-commerce.  One option, which is already implemented in the national scale in the United States is website certification.  This certification is shown by a "trustmark" which is a seal that is published on the websites.  For example, the Global Trustmark Alliance has instigated an effort to implement a single and globally-recognized trustmark.  There are other organizations such as TRUSTe, WebTrust, VeriSign, and GeoTrust that provide worldwide online certification and security services. 

 

At the Law Offices of Salar Atrizadeh, we guide our clients in legal matters by using extensive knowledge and skills to create innovative solutions. Please contact us today to set up a confidential consultation. 

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