House to Vote On Extending Internet Tax Moratorium

The U.S. House of Representatives is scheduled today to vote on the Internet Non-Discrimination Act, H.R. 3709, which will extend the current nationwide ban on new, special and discriminatory Internet taxes for five years.

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

The extended moratorium “gives the states the time to simplify,” said Ross Starek, senior vice president for the catalog industry at the Direct Marketing Association, Washington.

Last week, the House Judiciary Committee approved the bill by a vote of 29-8, and it has swiftly moved to the House, where it is likely to be approved. If the bill is approved, it would be sent to the Senate for consideration.

In addition to banning new taxes for five years, the bill, sponsored by Rep. Christopher Cox, R-CA, and its companion in the Senate sponsored by Senator Ron Wyden, D-OR, would do away with the previously grandfathered Internet taxes that a few states were able to impose before the original act passed.

H.R. 3709 also would limit the ability of states to tax remote sales made over the Internet because it designates several Internet-related items as not sufficient to qualify as nexus. These items include a retailer's Internet service provider, digital data on a server and the use of telecommunications services.

The bill also permanently bans Internet access charges and repeals the excise tax on telephone bills.

In related news, Rep. George Gekas, R-PA, chairman of the Commercial and Administrative Law Subcommittee of the House Judiciary Committee is holding a hearing May 17 to look at aspect of I-taxes. It will be the first in a series of hearings that will include examination of the states' expanded duty to collect sales and use tax.

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