Internet Tax Bills in the 107th Congress: A Brief Comparison

Publication Date: December 2001

Publisher: Library of Congress. Congressional Research Service

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Research Area: Media, telecommunications, and information

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Abstract:

The Internet Tax Freedom Act, enacted in 1998 (in P.L. 105-277), placed a 3year moratorium on the ability of state and local governments to 1) impose new taxes on Internet access or 2) impose any multiple or discriminatory taxes on electronic commerce. The Act grandfathered the state and local taxes on Internet access that were in place in 10 states as of October 1, 1998. The original Internet tax moratorium expired on October 21, 2001. Several bills to extend the moratorium were introduced in the first session of the 107th Congress. Some bills addressed other issues related to state and local taxation of the Internet and interstate commerce. H.R. 1552, the Internet Tax Nondiscrimination Act, passed the House on October 16, 2001, and the Senate on November 15, 2001, both by voice vote. The bill was enacted as P.L. 107-75 on November 28, 2001. The Act provided for a simple 2-year extension of the prior moratorium, until November 1, 2003. It continued the grandfathering protection for existing Internet access taxes.