House Leader Supports Extending Online Sales Tax Ban

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House Majority Leader Dick Armey said yesterday he would seek an extension of the ban on Internet sales taxes, effectively blocking a push by states and municipalities that want to tax online commerce.


Speaking at an event outlining the House Republicans' high-tech agenda, Armey said he hoped to include a three- to five-year ban on Internet sales taxes in legislation that would make permanent the current ban on access taxes and other Internet-specific taxes not including sales tax.


But Armey said he would not seek a permanent ban on Internet sales tax.


Currently, there is a moratorium on new e-commerce taxes. The moratorium is part of the Internet Tax Freedom Act, which was signed into law Oct. 21, 1998. The legislation imposed a ban on new state and local Internet taxes until October 2001.


With only a few months left before the ban expires, legislation to extend the moratorium is bogged down in Congress as members weigh whether to link the issue to a broader overhaul of states' tax systems.


Reportedly, a deal is being negotiated by Senate Democrats and Republicans that would consider granting state and local governments more power to tax e-commerce if at least 25 states simplify their sales-tax codes.


Under a 1992 Supreme Court decision, states cannot require retailers to collect sales taxes unless they have a physical presence in that state.


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