If you live in one of 15 states, and you download music from iTunes, you owe your state sales tax on top of the price of the music. Until now, though, many states have not enforced the so-called iTunes Tax. However, given that a billion dollars' worth of music was downloaded in 2005, what was once a relatively insignificant issue is no longer small. Check with your state's revenue department to see how aggressively they are trying to collect.
C/Net said:
Of the 15 most populous states that, together, represent more than half of the U.S. population, three -- Texas, Indiana and Washington state -- tax media downloads, according to a News.com survey. In addition to the nation's capital, the lesser-populated states that impose such taxes are Alabama, Arizona, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Maine, New Mexico, South Dakota, Utah and West Virginia, according to an industry lawyer.
These states typically say taxing digital-media downloads is a matter of treating physical shopping and online purchases the same. Buying a CD at Tower Records is taxed, the argument goes, so why should a stream of bits from iTunes or Walmart.com be tax-free?
While only 15 states and the District of Columbia are taxing downloads now, more are thinking about it, according to C/Net:
"More states are beginning to tax downloaded products," said Steve Krantz of the Council on State Taxation, which represents companies that do business in many states. "Some are doing it through specific legislation. Others are doing it through the interpretation of previous law."
known as the This means that more Americans will be obligated to pay more on April 15 because of a concept known as the use tax. If your home state taxes digital downloads, those levies are generally collected either when purchases are made or on tax day, depending on the location of the Internet retailer.
One reason that music and movie downloads have largely escaped the notice of tax collectors is that, until recently, the market was relatively small. But the dizzying success of iTunes and such rivals as Yahoo! Music Unlimited and eMusic.com has exposed a rich vein of untapped revenue. Hollywood studios raised the stakes even higher this month by announcing plans to sell movies over the Internet that buyers can keep.
Digital sales of music tripled from 2004 to 2005, leaping from $400 million to $1.1 billion worldwide, according to the International Federation of the Phonographic Industry, a trade association known as IFPI. The U.S. recording industry estimates that domestic sales totaled $503 million last year, but that figure doesn't include movies, e-books, online video games and other forms of digital media.
That remarkable growth has prompted states like Kentucky to revisit their laws and impose new taxes on media downloads. "Music is included because music downloads fit the definition of personal property," said Jill Midkiff, a spokeswoman for the Kentucky Department of Revenue.
Similar proposals are on the horizon, with Internet companies tracking tax expansion efforts in New Jersey, Vermont and Rhode Island. New Jersey Gov. Jon Corzine, a Democrat, proposed in his budget (click here for PDF) that "downloaded music and videos" be taxed starting Oct. 1. The state tax agency expects legislation to be introduced in June.
Contact-Lens Story Still Unfolding
On March 30, I first passed along what then appeared to be a localized story of a troubling rise in cases involving a fungus among contact-lens wearers.
The next day, Bausch & Lomb [PDF] began working with the feds to figure out if the company's contact-lens solution could be at the center of the problem. Yesterday, the company asked retailers to temporarily remove [PDF] its ReNu with MoistureLoc from their shelves and urged customers to change to another brand of contact lens solution for the time being. (See updated news coverage.)
According to The Associated Press, there are reports of 109 such cases in 17 states. Still, nobody knows the source of the problem.
The Associated Press says:
The company halted U.S. shipments of its ReNu with MoistureLoc contact lens solution Monday night while the Centers for Disease Control and Prevention investigates 109 reports of infection caused by a fungus called Fusarium in patients in 17 states.
The agency has made no direct link between ReNu and the infections, traced back to June 2005, but a high incidence of the affected people had used the solution.
The brand marketing world is watching this case closely. BrandWeek.com explains that how a company responds in a time of crisis builds trust or distrust with consumers:
One problem facing B&L is that so far investigators have not been able to identify what, if any, connection there is between the cleaner and the fungus. The company may actually be suffering from the success of its own branding. According to the CDC, out of the 30 patients on whom complete data was available, 28 were soft-contact users, and all 26 patients who remembered the brand of cleaning solution they had used before the infection said it was ReNu.
While the CDC report indicates a product-related problem, the very low number of cases makes it difficult to determine if this is an outbreak or just a result of better screening for the fungus. In a statement on the agency’s Web site, the CDC said the infection occurred “rarely” with contact lens use.
There is a collection of statements from Bausch & Lomb on the company's homepage, including a briefing from the company's CEO [PDF] and an FAQ page [PDF].
Mumps Warning
There is a mumps outbreak in the Midwest. As of April 13, 2006, a total of 605 possible mumps cases [PDF] have been reported to the Iowa Department of Public Health (IDPH) during 2006. It is the largest mumps outbreak in 18 years.
The median age of those who have gotten sick is 21 years. (See a PDF version of the IDPH's mumps fact sheet.)
This outbreak has spread across Iowa, and mumps activity, possibly linked to the Iowa outbreak, is under investigation in six neighboring states, according to the Centers for Disease Control & Prevention:
- Illinois (four cases)
- Kansas (33 cases)
- Minnesota (one case)
- Missouri (four cases)
- Nebraska (43 cases)
- Wisconsin (four cases)
The reasons for this outbreak are under investigation, but health officials think they may have a clue. The CDC has listed some very specific airline flights in which passengers may have been exposed to the mumps.
[The Iowa Department of Public Health] has identified two persons who had mumps diagnosed and were potentially infectious during travel on nine different commercial flights involving two airlines [from] March 26 [to] April 2, 2006. The commercial airline flights identified with a potentially infectious traveler are listed below by date, carrier and flight number:
Northwest Airline (NWA) flights:
- March 26 NWA (Mesaba) #3025 from Waterloo, Iowa to Minneapolis, Minn.
- March 26 NWA #760 from Minneapolis, Minn., to Detroit, Mich.
- March 27 NWA #0260 from Detroit, Mich., to Washington, D.C.-Reagan National
- March 29 NWA #1705 from Washington, D.C.-Reagan National to Minneapolis, Minn.
- March 29 NWA (Mesaba) #3026 from Minneapolis, Minn., to Waterloo, Iowa
American Airline (AA) flights:
- April 2 AA #1216 from Tucson, Ariz., to Dallas, Texas (DFW)
- April 2 AA #3617 from DFW to Lafayette, Ark. (Northwest Arkansas Regional [NAR])
- April 2 AA #5399 from NAR to St. Louis, Mo.
- April 2 AA #5498 from St. Louis, Mo., to Cedar Rapids, Iowa
Persons on these flights who have symptoms consistent with mumps within 21 days of travel should be evaluated for mumps by a health-care provider. Health-care providers should remain vigilant for mumps among persons with parotitis or other salivary gland inflammation. Cases of suspected mumps should be reported immediately to public health officials.
Last year, the United Kingdom experienced a mumps outbreak, which sickened more than 56,000 people.
Delta Pilots Strike Looms
Like thousands of other fliers, I am closely watching the Delta pilots' negotiations. (Get updated news coverage here.)
I have two Delta flights already booked for the next two weeks, so my travel agent and I agreed that a good course of action is to buy some refundable tickets on other airlines in case there is a strike.
I wonder if airports have started thinking ahead enough to start preparing cots for the flood of travelers who would get stuck in a strike. Would food courts and club lounges stay open late/open early?
Health Problems for 9/11 Survivors
The Morbity and Mortality Weekly Report published a new study on the lingering physical and mental health problems that people who witnessed the attacks on the World Trade Center continue to experience.
Why Tiger's Use of the "S" Word Raised Eyebrows
Until I read this story, I really did not know what the "S" word was. Here is what the "urban dictionary" says.
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Editor's Note: Al's Morning Meeting is a compendium of ideas, edited story excerpts and other materials from a variety of Web sites, as well as original concepts and analysis. When the information comes directly from another source, it will be attributed and a link will be provided whenever possible. The column is fact-checked, but depends upon the accuracy and integrity of the original sources cited. Errors and inaccuracies found will be corrected. 
