Internet Tax Ban Likely To Become Permanent

Members of Congress have tried for years to remove the sunset date on the 1998 ban, which has required a number of extensions.
Katie Kuehner-HebertDecember 10, 2015

Sen. Ron Wyden, D-Ore., who in 1998 co-authored the original Internet Tax Freedom Act that was set to expire, on Wednesday said a ban on taxes on Internet goods and services, as well as Internet access taxes, will likely become permanent.

Wyden was able to include the permanent ban in the conference report for customs and trade enforcement legislation negotiated by the heads of the tax-writing committees in both the House and Senate. The legislation is expected to pass, according to The Hill.

“Extending the tax ban indefinitely would be a key victory for lawmakers who have tried for years to remove the sunset date on the 1998 ban, which has required several extensions,” the publication reported.

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The 1998 law prohibits state and local governments from taxing Internet access, and bans multiple and discriminatory taxation against digital goods and services delivered over the Internet.

“I co-wrote the Internet Tax Freedom Act nearly a decade ago to help spur the growth of the digital economy,” Wyden said in a press release. “Today online commerce is responsible for hundreds of thousands of jobs. In my view, when you have something that works, that has stood the test of time, you ought to make it permanent.”

The stand-alone Internet tax ban that is included in the legislative package has received wide support from both parties in past years and is largely non-controversial, according to The Hill. The legislation has 50 cosponsors in the Senate and 191 cosponsors in the House.

But it has stalled in past years as some members attempted to tie the measure to a more controversial online sales tax bill, which would give states the power to collect a sales tax from businesses that don’t have a physical presence in their boundaries.

Tying the two items together faced resistance in the House last year and would have proven harder in the current Congress, now that Republicans control the Senate.

A grandfather clause in the original ban allowed states to continue collecting Internet access taxes if their laws were in place before the 1998 law. Seven states are grandfathered into the system and collect more than a half billion off it each year.

That grandfather clause will be phased out over the next four years.