*House Extends Internet Tax Moratorium

Share this article:
The U.S. House of Representatives passed the Internet Non-Discrimination Act, H.R. 3709, yesterday by a vote of 352-75. Now, the bill, which extends the current nationwide ban on new, special and discriminatory Internet taxes for five years, will move to the Senate, where it is likely to face a harder fight.

The current moratorium is set to expire Oct. 21, 2001. The bill would extend the ban until Oct. 21, 2006.

The Senate debate over the bill will likely see fierce arguments from special interest groups on both sides of the Internet tax issue.

"State and local tax officials and governors have lined up major retailers and real estate companies to help them do battle," said Roscoe B. Starek, senior vice president, catalog industry at the Direct Marketing Association, Washington.

Direct marketers are happy with the vote to extend the moratorium because it "gives the states the time to simplify," Starek said.

In addition, they are pleased that the bill leaves the rules governing state or local governments' ability to collect regular sales or use taxes on remote sales untouched. These rules, set by the U.S. Supreme Court, say a state can't collect taxes unless an Internet or catalog business has a physical presence in that state.

"The rule of previous U.S. Supreme Court decisions is clear," Starek said. "It makes no difference if you are a bricks-and-mortar store, catalog or online e-tailer. A marketer now has the responsibility to collect and remit taxes only for those states where it has a physical presence. Extending the moratorium to 2006 ensures that this fair system, supported by two decisions of the Supreme Court, remains the law of the land."

In addition to banning new taxes for five years, the bill would:

* Leave unchanged state and local taxes on Internet sales and services and allow e-sales to be taxed the same as mail order, catalog and telephone sales;

* Bar taxes that subject buyers and sellers to taxes in multiple states;

* Kill certain grandfather clauses that allowed some states to tax Internet sales before the original 1998 Internet Tax Freedom Act passed. Those states are Connecticut, Wisconsin, Iowa, North Dakato, South Dakato, New Mexico, Ohio, South Carolina, Texas and Tennessee.
Share this article:
You must be a registered member of Direct Marketing News to post a comment.

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs:

More in News

De Quinto Tapped as Coke's Next CMO

De Quinto Tapped as Coke's Next CMO

The president of the company's Iberia Business Unit will take over from Joe Tripodi upon his retirement in February.

Customer Centricity Is Spurring Marketing-Tech Investments

Customer Centricity Is Spurring Marketing-Tech Investments

A majority of marketers rank customer satisfaction improvements as paramount in the technology investment decisions.

Big, Bold Moves in the C-Suite

Big, Bold Moves in the C-Suite ...

JCPenney appoints Home Depot's Marvin Ellison as CEO; Harte Hanks and JWT add hitting power to their C-level benches