Tax Cybrary

Glossary of Terms

Here you'll find definitions for some of the terms used throughout the Tax Cybrary to help clarify the issues around Internet taxation and electronic commerce. 

Internet Taxation

HTML
HTTP
Internet Access
Sales of Goods over the Internet
Software/Information Downloads
Tangible Personal Property
Nexus
Use Tax
Utility Tax

Electronic Commerce

Back Office
Brick-and-Mortar Companies
Browser
Browser-based application
Business-to-Business (B-to-B) E-Commerce
Business-to-Consumer (B-to-C) E-Commerce
Buy-side
Click-and-Mortar Companies
Customer Relationship Management (CRM)
Dot-coms
E-Business
E-Commerce (EC, Electronic Commerce)
E-Markets
Firewall
Front Office
FTP
Java
Java Beans
Java Objects
Java Wrapper
Object-Oriented Programming
Portal
Sell-Side
Supply Chain Management
Web-enabled Applications
XML (Extensible Markup Language)

HTML (HyperText Markup Language) -- The coding language used to create Hypertext documents for use on the World Wide Web. HTML looks a lot like old-fashioned typesetting code, where you surround a block of text with codes that indicate how it should appear, additionally, in HTML you can specify that a block of text, or a word, is linked to another file on the Internet. HTML files are meant to be viewed using a World Wide Web Client Program, such as Netscape or Mosaic.

HTTP (HyperText Transfer Protocol) -- The protocol for moving hypertext files across the Internet. Requires a HTTP client program on one end, and an HTTP server program on the other end. HTTP is the most important protocol used in the World Wide Web (WWW).

Internet Access - A service provided by companies, known as Internet Service Providers or ISPs, that maintain computers (servers) which are directly connected to the Internet. Their customers can access the Internet through a modem connection or direct line from their computers to the ISP server.

Sales of Goods over the Internet - The Internet serves as a marketing and order-taking vehicle for products which are then mailed to the buyer. In other words, the Internet acts as an on-line catalogue.

Software/Information Downloads - In addition to marketing and order-taking, the Internet serves as a delivery channel for products which can be transferred electronically, such as information, data or canned computer software.

Tangible Personal Property - In many cases the taxability of a transaction is based on whether or not there is an exchange of "tangible personal property" (TPP). Although states differ in their specific definition and application of TPP, it is generally held to be something that can be seen and/or touched. Some states consider the sale of data or software which is downloaded over the Internet to be an exchange of TPP, and therefore subject it to sales tax. In other states, these transactions are considered intangible.

Nexus - A seller’s minimum level of physical presence within a state that permits the taxing authority to require the seller to register, collect and remit sales/use tax and comply with the state's taxing statutes and regulations.

Use Tax - A tax on the storage, use, or other consumption of tangible personal property not subject to sales tax or otherwise exempt from tax, usually because the property was purchased outside of the jurisdiction in which it will be used. Transactions are generally subject to sales or use tax, but not both, and payment is generally self-imposed by the buyer/user.

Utility Tax - A tax on the consumption of public utilities, such as electricity. In some states, telecommunications services are subject to a utility tax; Internet access or downloading of data or software purchased on the Internet might be subject to tax under utility tax laws.

Back Office: A "back-office" application or program serves indirectly in support of the front-end services (Financials, Supply Chain, etc.)A "front-office" application is one that application users i.e. customers, partners, etc.) interact with directly (CRM apps, Web apps, etc.).  A front-office application might interface directly with users and forward requests to a remotely-located back-office program in another computer to get requested data or perform a requested service.

Brick-and-Mortar Companies: Describes a business that conducts business in the physical world only. A local bookstore, that does not sell goods on-line is an example of a brick-and-mortar company.

Browser: A browser is an application program that provides a way to look at and interact with all the information on the World Wide Web. The most common browsers are Netscape Navigator, and Microsoft Internet Explorer and America Online.

Browser-based application: A software application built specifically to be accessed via a web browser.

Business-to-Business (B-to-B) E-Commerce: Business conducted on-line between two commercial businesses, based upon pre-arranged contracts.

Business-to-Consumer (B-to-C) E-Commerce: Business conducted on-line between a commercial business and an individual consumer, with no formal, ongoing business relationship.

Buy-Side: Synonymous term to Business-to-Business (B-to-B) E-Commerce

Click-and-Mortar Companies: Describes a business that exists online and in the physical world. Barnes and Noble Booksellers is an example of a click-and-mortar store.

Customer Relationship Management (CRM): An information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth.

Dot-coms: Businesses that only conduct business on-line. For example, Amazon.com only sells merchandise on-line, and has no physical storefront.

E-Business: "e-business" ("electronic business," derived from such terms as "e-mail" and "e-commerce") is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.

E-Commerce (EC, Electronic Commerce): E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web. In practice, this term and a new term, "e-business," are often used interchangeably. For online retail selling, the term e-tailing is sometimes used.

E-Markets: An on-line marketplace, where buyers and sellers are grouped together to conduct business with one another. A recent article in the Wall Street Journal about plans at GM and Ford described as such:

"Both auto makers hope to save billions by replacing an elaborate network of personal contacts and triplicate forms with a global electronic forum where deals can be done almost instantly. And both want their suppliers to use the Web sites to make their own purchases or sell excess inventory. A company that provides suspension parts to GM, for example, might use GM's virtual marketplace to get a more favorable price on steel by piggybacking on the auto maker's enormous purchasing power."

Firewall: A set of related programs, located at a network gateway server, that protects the resources of a private network from users from other networks. (The term also implies the security policy that is used with the programs.) An enterprise with an intranet that allows its workers access to the wider Internet installs a firewall to prevent outsiders from accessing its own private data resources and for controlling what outside resources its own users have access to.

Front Office:  A "front-office" application is one that application users interact with directly (CRM apps, Web apps, etc.). A "back-office" application or program serves indirectly in support of the front-end services (Financials, Supply Chain, etc.) A front-office application might interface directly with users and forward requests to a remotely-located back-office program in another computer to get requested data or perform a requested service.

FTP: FTP (File Transfer Protocol), a standard protocol, is the simplest way to exchange files between computers on the Internet. Like the Hypertext Transfer Protocol (HTTP), which transfers displayable Web pages and related files, and the Simple Mail Transfer Protocol (SMTP), which transfers e-mail, FTP is an application protocol that uses the Internet's TCP/IP protocols. FTP is commonly used to transfer Web page files from their creator to the computer that acts as their server for everyone on the Internet. It's also commonly used to download programs and other files to your computer from other servers.

Java: Java is a programming language expressly designed for use in the distributed environment of the Internet. It was designed to have the "look and feel" of the C++ language, but it is simpler to use than C++ and enforces a completely object-oriented view of programming. Java can be used to create complete applications that may run on a single computer or be distributed among servers and clients in a network. It can also be used to build small application modules or applets for use as part of a Web page. Applets make it possible for a Web page user to interact with the page.

The major characteristics of Java are:

• The programs you create are portable in a network. Your program is compiled into Java bytecode that can be run anywhere in a network on a server or client that has a Java virtual machine. The Java virtual machine interprets the bytecode into code that will run on the real computer hardware. This means that individual computer platform differences such as instruction lengths can be recognized and accommodated locally just as the program is being executed. Platform-specific versions of your program are no longer needed.
• The code is "robust," here meaning that, unlike programs written in C++ and perhaps some other languages, the Java objects can contain no references to data external to themselves or other known objects. This ensures that an instruction can not contain the address of data storage in another application or in the operating system itself, either of which would cause the program and perhaps the operating system itself to terminate or "crash." The Java virtual machine makes a number of checks on each object to ensure integrity.
• Java is object-oriented, which means that, among other characteristics, similar objects can take advantage of being part of the same class and inherit common code. Objects are thought of as "nouns" that a user might relate to rather than the traditional procedural "verbs." A method can be thought of as one of the object's capabilities or behaviors.
• In addition to being executed at the client rather than the server, a Java applet has other characteristics designed to make it run fast.
• Relative to C++, Java is easier to learn. 

Java was introduced by Sun Microsystems in 1995 and instantly created a new sense of the interactive possibilities of the Web. Both of the major Web browsers include a Java virtual machine. Almost all major operating system developers (IBM, Microsoft, and others) have added Java compilers as part of their product offerings.

Java Beans: An object-oriented programming interface from Sun Microsystems that lets you build re-useable applications or program building blocks called components that can be deployed in a network on any major operating system platform. Like Java applets, JavaBeans components (or "Beans) can be used to give World Wide Web pages (or other applications) interactive capabilities such as computing interest rates or varying page content based on user or browser characteristics.

From a user's point-of-view, a component can be a button that you interact with or a small calculating program that gets initiated when you press the button. From a developer's point-of-view, the button component and the calculator component are created separately and can then be used together or in different combinations with other components in different applications or situations.

Java Objects: Specific instances of a certain class of data. For example, a class such as dog, where the object could be Doberman. Java objects can be discretely passed between applications using the Java programming language.

Java Wrapper: a method of integration utilizing the existing APIs of a C-based application that creates data to precede or frame the main data, or a program that sets up another program, so that it can run successfully in a Java environment. It does not enable the use of Java Objects.

Object-Oriented Programming: Object-oriented programming (OOP, for short) is a revolutionary new way of looking at computer programming. Historically, programs have been viewed as procedures (or we may think of these as "verbs") that operate on data. OOP takes the view that programs should start by thinking about the data (or "nouns") first. After all, the primary purpose of computing is the result...not the computing procedure itself. By using data modeling concepts and techniques, a programmer can identify data objects and their relationships. A generalization of a data object along with its possible data variables and methods (what to do with the variables) is a class of data objects. A real instance of a class is an object. (It's what you run in the computer.)

Some of the ideas and advantages of OOP include:

• The concept of a data class makes it possible to define subclasses of data objects that share some or all of the main class characteristics. Called inheritance, this property of OOP forces a more thorough data analysis, reduces development time, and ensures more accurate coding.
• Data hiding is possible because an object and its methods will know only about the data they need to know about. Because other objects and methods in the application program cannot be accessed without rewriting the object, the possibilities of accidental or unintended data corruption that are possible in procedural programs are not possible with OOP.
• The definition of a class is reusable not only by the program for which it is initially created but also by other object-oriented programs (and, for this reason, can be more easily distributed for use in networks). The concept of data classes allows a programmer to create new data types that are not defined in the language itself.

C++ is the most popular object-oriented language today.  

Portal: A term, generally synonymous with gateway, for a World Wide Web site that is or proposes to be a major starting site for users when they get connected to the Web or that users tend to visit as an anchor site. In July 1998, leading portals included Yahoo, Excite, Netscape, Lycos, CNet, and Microsoft Network. With its own private array of sites when you dial in, America Online (AOL) could be thought of as a portal to its own Web portal at AOL.com. A number of large access providers offer portals to the Web for their own users. Most portals have adopted the Yahoo style of content categories with a text-intensive, faster loading page that visitors will find easy to use and to return to. Companies with portal sites have attracted much stock market investor interest because portals are viewed as able to command large audiences and numbers of advertising viewers.

Typical services offered by portal sites include a directory of Web sites, a facility to search for other sites, news, weather information, e-mail, stock quotes, phone and map information, and sometimes a community forum. Excite is among the first portals to offer users the ability to create a site that is personalized for individual interests.

Sell-Side: Synonymous term to Business-to-Consumer (B-to-C) E-Commerce.

Supply Chain Management: The management of suppliers, production and distribution.

Web-enabled applications: A software application that was not written specifically for the web, but has been altered in some way, or has had an interface built into it to allow it to run over the web.

XML (Extensible Markup Language): Is a flexible way to create common information formats and share both the format and the data on the World Wide Web, intranets, and elsewhere. For example, computer makers might agree on a standard or common way to describe the information about a computer product (processor speed, memory size, and so forth) and then describe the product information format with XML. Such a standard way of describing data would enable a user to send an intelligent agent (a program) to each computer maker's Web site, gather data, and then make a valid comparison. XML can be used by any individual or group of individuals or companies that wants to share information in a consistent way.

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