Politics and Law

A State Department press briefing gives some insight into why the U.S. government requested that Twitter postpone a scheduled downtime during a crucial period in the post-election upheaval in Iran.

"I think, as I was following this, these developments over the weekend...I began to recognize the importance of new social media as a vital tool for citizens' empowerment and as a way for people to get their messages out," State Department spokesman Ian Kelly said Tuesday, according to a transcript of the department's daily press briefing (which was not held specifically to address the Twitter question). "And it was very clear to me that these kinds of social media played a very important role in democracy, spreading the word about what was going on."

CNN reported Tuesday that the State Department had been behind the decision by Twitter and its hosting provider to reschedule the downtime for an hour when it would be the middle of the night in the Iranian capital of Tehran.

Kelly was then asked to comment on "discussions that (the State Department is) having with networking sites about maintaining the technology, about how the State Department as an institution is monitoring these type of sites to gain information about what's going on."

His response: "We're monitoring many different media, including some of these sites. And we've had, of course, talks with Twitter as well...I don't want to go into the detail of the nature of those talks right now."

Another reporter then pointed out that "by not providing any information on the nature of the talks, it indicates that you have some role in kind of providing messages to Twitter, messages to Iranians."

Kelly denied this. He said he was not sure who exactly within the State Department had been in touch with Twitter and added that "we use a number of social media outlets, and we're in constant contact with them. And as I said before, we were, of course, monitoring the situation through a number of different media, including social media networks like Facebook and Twitter...this is about the Iranian people. This is about giving their voices a chance to be heard. One of the ways that their voices are heard are through new media."

With the Iranian government clamping down on foreign journalists, Kelly has a point: access to Twitter and ilk are crucial sources of information.

Social media tools like Twitter and Facebook have already emerged as sources of raw news in disasters and political crises before--from the Hudson River emergency plane landing to the terrorist attacks in Mumbai. But this is the first time they've been highlighted as vital information channels in Iran--both for protesters trying to spread information and for government authorities trying to gather it.

Tax protester at San Francisco "tea party" gathering on April 15 holds up sign saying "IRS: We take $$$$$$ from working people to pay for big government."

(Credit: Declan McCullagh/CNET)

If a little-known but influential alliance of state politicians, large retailers, and tax collectors have their way, the days of tax-free Internet shopping may be nearly over.

A bill expected to be introduced in the U.S. Congress as early as Monday would rewrite the ground rules for mail order and Internet sales by eliminating what its supporters view as a "loophole" that, in many cases, allows Americans to shop over the Internet without paying sales taxes.

Currently, Americans who shop over the Internet from out-of-state vendors aren't always required to pay sales taxes at the time of purchase. Californians buying books from Amazon.com or cameras from Manhattan's B&H Photo, for example, won't pay sales taxes at checkout time that they would if shopping at a local mall.

"We will have the bill ready for introduction by next Monday," said Neal Osten of the National Conference of State Legislatures. "We finalized the language and now we're working out the remaining issues and adding some new provisions at the request of various stakeholders."

This is hardly a new debate: pro-tax officials and state governments have been pressing Congress to enact such a law for at least seven years. They argue that reduced sales tax revenue threatens budgets for schools and police, and say that, as a matter of fairness, online retailers should be forced to collect the same taxes that brick-and-mortar retailers do.

Even though those arguments have been unsuccessful so far, the National Conference of State Legislatures and its allies believe the recession has sliced into sales tax revenue so much that Congress will have to act. A report this week from the Rockefeller Institute says that sales taxes have declined by 6.1 percent, the largest decline in half a century.

"One of the big things the states have learned in the recession is they have declining revenues," said Scott Peterson, executive director of the Streamlined Sales Tax Project, which counts state politicians and tax collectors on its governing board. "We're very optimistic about Congress this year. We think we are within a day or two of finalizing the legislation."

The final legislation is expected to be introduced by Sen. Mike Enzi, a Wyoming Republican, and Rep. Bill Delahunt, a Massachusetts Democrat, who have championed similar proposals in the past. Delahunt's office on Wednesday confirmed he was interested; Enzi's did not respond.

On the other side are the Direct Marketing Association, the Electronic Retailing Association, and companies including eBay, L.L. Bean, and Overstock.com. One of their biggest objections to the idea of collecting sales taxes on out-of-state shipments is the dizzying complexity of state laws.

Take candy, which would seem to be a straightforward item to tax. It isn't. During a 2003 discussion of tax policy, a representative of Indiana, James Turner, noted that a proposed definition of candy would have taxed the Milky Way Midnight candy bar but not the original Milky Way bar.

But further investigation showed that Turner's counter-proposal would have treated "certain flavors of Pop Tarts" and Cookies and Twix Crunchy Cookie Bars as candy--but not Cookies and Snickers Crunchy Cookie Bars. Peanut butter Girl Scout cookies would be candy, but Thin Mints or Caramel deLites would be classified as food.

Bizarre distinctions like this, coupled with the existence of more than 7,000 different tax agencies, are why the U.S. Supreme Court ruled that out-of-state retailers generally couldn't be obligated to collect sales taxes unless Congress changes the law. The justices noted in a 1992 case called Quill v. North Dakota: "Congress is now free to decide whether, when, and to what extent the States may burden interstate mail order concerns with a duty to collect use taxes."

One exception to that rule is a legal concept called "nexus," which means a company can be forced to collect sales taxes if it has a sufficient business presence. If Amazon had an office in California, it already would be collecting sales tax for Golden State residents. (Another exception is the sale of cigarettes, which is covered by the Jenkins Act.)

In response to complexity concerns, the pro-tax forces have offered a proposal that they hope Congress can be persuaded to adopt. The concept is called the Streamlined Sales Tax Agreement, invented in 2002 by state tax officials hoping to straighten out some of sales tax laws' most notorious convolutions.

Since 2003, more than 20 states have signed on, either wholly or partially, to the agreement, meaning they agree to simplify their tax codes and make them uniform. If enough states participate, proponents believe it will be easier to convince Congress to make sales collection mandatory for out-of-state retailers.

"You'll see governors from states who are active participants pushing the Hill to move the issue forward--Kansas has been a long-standing leader. North Dakota, Iowa, Oklahoma, those are some with members on the governing board," said David Quam, director of the office of federal regulations at the National Governors Association. "The states have done the heavy lifting of coming up with a voluntary system that makes sense. Now it's Congress' turn to grant states the authority to collect this."

Representatives of the Streamlined Sales Tax Project are gathering in Washington, D.C. next month for a three-day governing board meeting, including a "lobbying day" that's scheduled for May 13.

Under existing law, the caveat is that online purchases from sites like Amazon and eBay only seem to arrive tax-free. Legally, however, purchasers are required to pay their own state's sales tax rate--the concept is called a "use tax"--and then voluntarily report the amount owed at tax time.

California residents, for instance, are now burdened with a sales and use tax of at least 8.25 percent. State law is strict: if Californians travel to a state with a 5 percent tax and shop there, the law requires them to cough up the 3.25 percent difference when they return. Online purchases are taxed as well.

But compliance is spotty at best. California's Board of Equalization estimates the state lost $1.34 billion in 2003 because residents aren't paying use taxes--and attributes $208 million of that to online purchases.

"There's no member of NRF that does not support" the forthcoming legislation, said Maureen Riehl, vice president of government relations at the National Retail Federation. "The sooner we can get it done the better, as far as retailers are concerned."

Online retailers tend to disagree. If the Streamlined Sales Tax Project (SSTP) were actually simple and easy for a shipper to work with, they might be more willing to compromise, but that may not be the case.

"The states are desperate for new revenue and I think they realize they're straying far from the simplification they originally promised," said Steve DelBianco, executive director of NetChoice, which counts as members AOL, eBay, NewsCorp, Oracle, Verisign, and Yahoo. "That creates an urgency on their part--to get the federal mandate before it becomes clear they have no intention to simplify."

"They have no real intention of simplifying or compensating sellers for the burdens of collecting," DelBianco said. "It's a shell game."

Among his complaints: That states are unwilling to compensate sellers for the burden of sales tax collection; that small businesses with minimal sales should be exempt; that only one state (as opposed to all states) should be able to audit a business; that participating states are not paying attention to the idea of simplification and are actually making definitions more complex.

"There has to be some oversight," DelBianco said. "These guys have demonstrated--the streamlined states have demonstrated -- an inability to stick to the streamlined promise. Only the U.S. Congress is going to be able to protect sellers from unreasonable burdens."

CNET's Stephanie Condon contributed to this report.

The State Department is bolstering its use of social media with the appointment of a new senior adviser on innovation to Secretary of State Hillary Clinton.

(Credit: One Economy)

One Economy co-founder Alec Ross, whose nonprofit organization brings technology to low-income people, starts at the State Department on Monday, The Washington Post reported. As a senior adviser for the State Department, he's charged with using technology to enhance the department's diplomatic missions in areas such as health care, poverty, and human rights.

Internet diplomacy is nothing new in Washington, but the Obama administration has put more emphasis on the potential to increase public dialogue through the Internet.

Ross served as an adviser to the Obama transition team on the technology, innovation, and government reform policy working group, which was led in part by Julius Genachowski, President Obama's choice to chair the Federal Communications Commission. As executive vice president for external affairs at One Economy, he coordinated efforts between the private sector, government, and nonprofits to achieve the organization's mission. He also led the organization's public policy initiatives, which focus on federal and local laws and regulatory issues regarding technology and telecommunications in low-income communities.

The president-elect has been showing off his Web savvy on Change.gov, but George Bush demonstrated Wednesday he also advocates using the Internet to facilitate democracy.

President Bush, in recognition of Human Rights Day, met with bloggers from Belarus, Burma, China, Cuba, Egypt, Iran, and Venezuela at the White House and via video teleconference to discuss blogging in favor of democratic change.

The administration has supported pro-democracy new media efforts through programs like the Broadcasting Board of Governors, an independent group responsible for all U.S. government and government-sponsored, non-military, international broadcasting. The BBG collects reports from citizen journalists with cell phones, and it sends out news reports via text messaging and targeted e-mails, encouraging citizens in countries with oppressive censorship to "join the information revolution," according to the White House. Bush increased funding for BBG from $441 million in 2001 to $670 million in 2008.

The State Department has also taken to promoting democracy via the Internet with a Democracy Video Challenge, a contest to produce a short video that completes the phrase "Democracy is..." Seven winners from six different regions of the world will be announced in June 2009, and their films will be shown in New York, Washington, and Hollywood.

Last year, The Washington Post reported the State Department has a three-person "digital outreach team" that posts entries in Arabic on influential Arabic blogs to promote moderate views of Islam.

A federal court case involving Internet wiretapping has revealed the Bush administration at its worst.

I don't say this lightly. Senior attorneys from the U.S. Department of Justice showed up before the 9th Circuit Court of Appeals last week and argued that the president should be able to violate federal law--and that judges can't do anything about it.

Excerpt from a Justice Department 'state secrets' brief

Their argument rests on something called the "state secret" privilege, which traditionally has been used to pull the plug on lawsuits that could, for instance, disclose national-security secrets such as a crashed military plane's true mission.

But now President Bush and Attorney General Alberto Gonzales have expanded it to throw out a lawsuit (PDF) saying that AT&T illegally opened its network to the National Security Agency. Their arguments rest on the principle that even if the president is breaking the law, he can get away with it as long as he invokes national security. Courts would be demoted to a clerical role of noting that the "state secrets" privilege has been invoked and dismissing the case post-haste.

This would, if taken to its logical conclusion, allow the president to get away with murder.

Here, of course, we're talking about the Bush administration trying to derail a civil lawsuit against AT&T filed to right a wrong--there's no criminal prosecution--but the principle is the same. (Note that 50 USC 1809 makes it a federal felony to engage "in electronic surveillance under color of law, except as authorized by statute.")

No wonder the judges were skeptical. "The bottom line here is that once the executive declares that certain activity is a state secret, that's the end of it?" Judge Harry Pregerson asked. "No cases, no litigation, absolute immunity? The king can do no wrong?"

These are the kind of questions that journalists should be asking as well, and that's what I'm planning to do through this new blog here on CNET News.com. It's an independent, nonpartisan effort to report on the intersection of technology, law and policy in the areas that affect our lives and liberty.

And because I said it would be nonpartisan, I should acknowledge that the Department of Justice during the Clinton and Carter presidencies invoked the state secret privilege as well. And it's true that perhaps a Gore or Kerry presidency would have veered in the same expansive direction as Bush has. But that lies in the realm of speculation; the reality today is that we have the worrying prospect of a president who would place himself above the law.