Internet Taxation


Publication Date: November 2004

Publisher: Library of Congress. Congressional Research Service


Research Area: Media, telecommunications, and information



The Internet Tax Freedom Act (ITFA) was enacted as part of the Omnibus Consolidation and Emergency Supplemental Appropriations Act, P.L 105-277. The act imposed a three-year moratorium on new Internet taxation and established the Advisory Commission on Electronic Commerce (ACEC, the commission) in October of 1998. The final report of the commission, presented in April 2000, is available on the ACEC web page. The Internet tax moratorium prohibits the taxation of Internet access and the multiple or discriminatory taxation of Internet commerce. In the 107th Congress, the moratorium was extended through November 1, 2003 (the moratorium has expired) by the Internet Tax Nondiscrimination Act, P .L. 107-75. On April 29, 2004, the Senate passed S. 150, a bill to allow a four year extension of the moratorium (through November 1, 2007). The House has not yet taken action on the Senate bill, but the chambers apparently reached agreement on the measure through informal bicameral negotiations. The changes agreed to in the negotiations were embodied in S.Con.Res 146, a resolution to amend the enrolled version of S. 150. The Senate passed S. Con. Res. 146 on November 17, 2004.