Virtual Relief
THE U.S. HOUSE of Representatives passed by a voice vote the Internet Tax Freedom Act, which would not only place a three-year moratorium on new Internet taxes but also create a committee to examine whether and how the Internet might be taxed in the future. The committee’s work could affect taxes on other distance-selling methods, such as telephone and mail order sales.
The bill that the House passed on June 23, H.R. 4105, was introduced by Rep. Christopher Cox (R-CA) a day earlier, and is a merger of earlier versions passed by the Commerce and Judiciary committees.
The legislation would place a three-year halt on sales taxes on Internet access charges, and require that states tax goods ordered over the Net in the same way as mail order transactions. The Direct Marketing Association has opposed another provision calling for a committee to examine how the Internet might be taxed, fearing the result could be a national sales tax for direct-marketed goods.
The House bill passed contains a grandfather clause that allows eight states that already tax Internet access to continue doing so if they pass legislation within one year indicating a desire to do that. The eight states are Connecticut, Wisconsin, Iowa, North Dakota, South Dakota, New Mexico, Tennessee and Ohio.
Texas and South Carolina collect such taxes but opted not to be included in the grandfather provisions because their governors oppose these taxes.
Sen. Ron Wyden (D-OR) has a less controversial bill (S. 442) pending in the Senate.
