Tech Industry

Week in review: Taxing times

Online sales taxes, Internet access taxes, even IRS look-alike sites--there's plenty out there to boost anxiety levels.

This time of year can bring up issues that tax both your patience and your wallet.

The days of shopping online to avoid sales tax may soon be over. A powerful alliance of politicians, including key U.S. senators and the National Governors Association, is arguing that out-of-state retailers must be required to charge sales taxes on purchases. This is hardly a new debate, but the political dynamic is new. While its precise contours are difficult to map, a Democrat-controlled Congress is seen as more likely to agree to the idea than one controlled by Republicans.

Another factor that could tip the scales in Washington in favor of the pro-sales tax forces is a concept called the Streamlined Sales Tax Agreement, invented in 2002 by state tax officials hoping to straighten out some of the notorious convolutions of state tax laws. If that happens, they believe, it will be easier to persuade Congress to make sales collection mandatory for out-of-state retailers.

Many CNET readers expressed rage and frustration at the possibility of Internet sales being taxed, while many also debated the true purposes of taxation.

"I should have the right to purchase an item in a state that has no sales tax," . "States can compete for business by having competitive tax rates. States with prohibitive taxes should suffer the loss of revenue."

In another tax arena, a key U.S. senator says Congress may fail to renew a temporary ban on some state and local Internet access taxes that expires on November 1. Sen. Ron Wyden (D-Ore.) said he fears that lobbyists for state and local governments and their powerful allies in Washington will stymie efforts by Internet and telecommunications companies and free-market groups to make the ban permanent--or even to renew it again.

If the tax moratorium expires, monthly bills for Internet access could come to resemble bills for telephone service, with a welter of confusing taxes, recovery fees, surcharges and administrative fees tacked on at the end. Those fees can raise a subscriber's total cost by 20 percent to 30 percent.

If you feel like you are getting hammered by the IRS, you'd probably be especially irritated if you were ripped off by an IRS look-alike. The U.S. House of Representatives voted to punish commercial Web sites and e-mail senders that falsely portray themselves as having ties with the Internal Revenue Service.

Federal law already prohibits use of Treasury Department names and symbols commercially in a way that "could reasonably be interpreted or construed as conveying the false impression" that a site is associated with the federal agency itself. Current law does not exclude the Internet.

Another section of the bill targets ID fraud: it would require the IRS to notify taxpayers "as soon as practicable" if the agency discovers an individual's information may have been accessed and used in an unauthorized manner.

The IRS also warned that online filers should be aware of "late tax" scams. The scams lure taxpayers to Web sites that purport to offer free online tax filing services, but instead are set up to steal refunds, the agency said on its Web site late Friday. The IRS reminds people that only those services listed on its Web site are allowed to state that they are part of its "Free File Alliance."

The fraudulent Web sites accept tax information and actually submit the return through a legitimate free filing service, but the fraudsters change the taxpayers' bank account details to their own before filing, the IRS said.

Tech trouble
Tax season can be stressful enough even when your paperwork is in order, but this year many last-minute filers found that they could not get the IRS to take their returns. Many TurboTax customers were barred from filing their returns electronically, although they won't face any penalties for the problems caused by overloaded servers at Intuit.

A 48-hour reprieve granted by the IRS, however, has not quelled customer ire over how the nation's leading tax-preparation software company could have erred so badly in designing its computer systems.

Meanwhile, Research In Motion grappled with a widespread system failure that left the network for its BlackBerry devices in the Western Hemisphere unable to handle e-mails. According to an automated message on RIM's customer service hotline, the company experienced "technical difficulties with our BlackBerry service that may cause delays in sending or receiving messages."

Because the problem concerned the BlackBerry network, all cellular carriers that support BlackBerry devices were affected, though subscribers were still able to make phone calls and send and receive SMS text messages.

RIM said it had "determined that the incident was triggered by the introduction of a new, noncritical system routine that was designed to provide better optimization of the system's cache." In computing terms, a cache is a temporary storage area that allows data to be served up quickly. RIM said the "system routine" was not expected to affect the regular operations of the BlackBerry servers and infrastructure.

The massive e-mail outage highlights how vulnerable the company's network has become as it tries to keep up with demand for its popular service. Analysts say that judging from the nature of the outage and who was affected, the problem falls squarely on RIM's shoulders.

Intel inside China
Intel took its Developer Forum on the road to Beijing, signaling the importance it places on the booming Asian nation.

Intel has new chips in the works that it hopes will power the next generation of consumer electronics devices and telecommunications servers. The chips are designed to use the x86 instruction set architecture. Dubbed "system on a chip" products, they have lots of crucial components integrated directly onto the processor.

These consumer electronics chips will be aimed at devices like set-top boxes and televisions. Intel already makes chips for this segment, but those chips are basically scaled-down versions of notebook processors. The new processors, scheduled to arrive in 2008, will be designed specifically for this category.

Intel also disclosed plans for a project, code-named Larrabee, in which the company will develop high-performance processors for specific applications like scientific computing.

In addition, Intel demonstrated a memory chip based on a concept it has been tinkering with for nearly 30 years. Code-named Alverston, the chip is a phase-change memory device.

Phase-change memory is seen as a replacement for flash memory--used in cameras and phones--but it could also factor in the type of memory inserted into computers. Although manufacturers have been shrinking the size of flash memory chips rapidly and steadily over the past several years, the inherent properties and structure of flash have led many to believe that progress will begin to slow in the coming decade.

Intel is also doubling down on its investment in technology for handheld PCs with new chips and Linux support. Intel executives unveiled the company's Ultra Mobile 2007 platform at the Beijing event. Formerly known as McCaslin, the platform comes with one of two Intel processors designed specifically for UMPCs introduced last year as hybrid notebook PC/BlackBerry devices.

Also of note
Google's first-quarter profit rose 69 percent and results beat Wall Street expectations as the company turned search market-share gains into even more revenue from its core paid search advertising business... Google is very near to implementing a filtering service that would prevent copyright content from being uploaded to video-sharing site YouTube...Google is rebranding "Froogle" as "Google Product Search" and simplifying the interface to match the main search site.