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August 14, 2013
U.S. Senators Move to Make Ban on Internet Access Taxes Permanent
by Henry J. Reske

Full Text Published by Tax Analysts®

This document originally appeared in the August 2, 2013 edition of State Tax Today.

U.S. Sens. Ron Wyden, D-Ore., and John Thune, R-S.D., introduced legislation August 1 to make permanent the ban on state and local jurisdictions taxing Internet access.

Their measure, the Internet Tax Freedom Forever Act, joins other congressional efforts (S. 31 and H.R. 434) to make permanent the Internet Tax Freedom Act, originally enacted in 1998. The law, which has been extended three times, will expire November 1, 2014.

"As the Internet Tax Freedom Act enabled and promoted Internet access and adoption across America, the Internet became a platform to facilitate global commerce, sparking nothing short of an economic revolution," Wyden said in a statement.

"It facilitated the development and growth of the digital economy and has created new industries and the good-paying jobs that come along with them. Consumers, entrepreneurs, and innovators can breathe easy knowing that a permanent extension of ITFA is on its way."

At the dawn of the Internet age, local and state jurisdictions moved to tax the nascent technology, threatening its growth.

"Use of Internet technology is one of the key drivers of economic growth, innovation, and information in our 21st century economy," Thune said. "Keeping the Internet accessible to consumers encourages innovation and investment in our global economy."

Sen. Kelly Ayotte, R.-N.H., a sponsor of S. 31, wrote to Senate Finance Committee Chair Max Baucus, D-Mont., July 26 to urge him to ensure any tax reform proposal adopted by the committee would keep the Internet free from taxes.

Wyden spokesman Tom Caiazza told Tax Analysts that both Senate measures would extend the ban on Internet taxes permanently.

"Sen. Wyden's bill is an extension of his work on this issue since authoring the original ITFA and leading the extension of the law three times," he said. "The legislation includes findings that underline important principles that have been established since the law was first passed."

Such legislation is viewed as preemption of local and state tax authority and has opponents.

Federation of Tax Administrators Deputy Director Verenda Smith told Tax Analysts that the group, which represents the interests of state tax administrators, "has a standing resolution that essentially objects to such bills."

Smith said the "leading objection being, there is no reason shown why the Internet is such a delicate industry that it needs special protections from Congress, which they expect the states to pay for."

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