by Edited by Elana Varon

Washington D.C. Watch: Hardware Depreciation and International Web Security

Aug 15, 20014 mins
Data Center

Taxing Questions

Already forgotten about those PCs you replaced last month? Your CFO hasn’t. Thanks to a 15-year-old law that requires companies to depreciate computer equipment over five years, your company will be expensing those obsolete computers for three more years.

The IT industry has been fighting for shorter depreciation periods since nearly the advent of computers, says Bartlett Cleland, vice president and counsel of the Software Division of the Information Technology Association of America, an IT trade organization in Arlington, Va. It’s important for companies because claiming obsolete assets can inhibit their ability to attract investors, says Michael Erbschloe, vice president of research at Computer Economics, a Carlsbad, Calif.-based technology market research company. Also, with a shorter depreciation period, a company would write off equipment once it lost its value and be able to spend more on new equipment, he says.

Success has been elusive because policy makers figure it’s too expensive?although no one in Congress nor several tax experts we asked could tell us how much revenue the government would lose if the rules were changed. Gina Carty, a spokesperson for Sen. Conrad Burns (R-Mont.), who supports shorter depreciation periods for IT equipment, says that in this year’s tax cut bill, provisions like eliminating the marriage penalty were a higher priority.

But there are still bills in play to change the depreciation rules, including one sponsored by Burns and another by Rep. Jerry Weller (R-Ill.). Rep. Mac Collins (R-Ga.) proposed a complementary bill in May that would reduce the depreciation period for computers used to run manufacturing machinery.

Now for the bad news: It’s unlikely the bills will pass this year. Carty says that if companies want to see them move forward, they’ll have to lobby for them. Meanwhile, Weller has hit upon another strategy. His spokesperson, Ben Fallon, says the House could attach the depreciation bill to a pending minimum wage increase as compensation for requiring companies to increase employee pay.

-Lauren Capotosto

Online Border Patrol

The Internet has been credited with breaking down international boundaries. But when cybercrimes hit internationally, the perpetrators run for the friendliest border. Hacking isn’t illegal in every country, and there’s no treaty that requires foreign law enforcement officials to help hunt down and prosecute cybercriminals who launch their attacks from within their nation’s borders.

The Council of Europe, with lots of input from the United States, has drafted a treaty that promotes international collaboration to fight cybercrime. The treaty would make crimes such as denial-of-service attacks illegal in all signing countries.

Europe’s Committee of Ministers, the decision-making group within the Council of Europe, is expected to approve the treaty in November, after which signatories like the United States will have to ratify it for it to take effect. The U.S. Senate, which must ratify all international agreements, doesn’t have any plans yet to take up the treaty, though Chip Unruh, spokesman for Sen. Joseph Biden (D-Del.), who heads the Senate Foreign Relations Committee, says the panel could discuss it this fall.

The United States needs to ratify the treaty to get help from at least 40 other countries to prosecute cybercriminals, says Martha Stansell-Gamm, chief of the Computer Crime and Intellectual Property section of the Department of Justice.

While no one disputes the goal of the treaty, security experts and privacy groups have problems with it. The treaty would criminalize “white hat” hacking into company networks to test for security holes, says Elias Levy, CTO at SecurityFocus, a San Mateo, Calif., security services company. Meanwhile, David Banisar, deputy director of Privacy International in London, argues the treaty sets broad standards for data capture by law enforcement but no parameters for what data investigators can collect.

-L. Capotosto