House Passes Internet Tax Moratorium Bill

The U.S. House of Representatives on Sept. 17 passed the Internet Tax Nondiscrimination Act (H.R. 49), which seeks to permanently eliminate taxes on Internet access. The bill now moves on to the Senate as S. 52. A temporary moratorium on Internet access taxes — taxes on top of monthly Internet access charges — expires on Nov. 1.

In the three years since the current moratorium was established, state governors have sought ways to tie the issue of Internet access taxes to interstate sales taxes on online and offline sales. H.R. 49, however, focuses solely on the elimination of Internet access taxes. The bill’s passage may stem any momentum state governors have gained in linking Web access taxes and mail order sales taxes, says Direct Marketing Association spokesperson Louis Mastria. But catalogers shouldn’t assume the use-tax battle is over.

“You still have 45 governors who claim they need more revenue because their states are in bad financial straits,” Mastria says. “Plus, you can’t assume the Senate will follow suit [and pass the bill], and it’s very possible that these two issues will continue to be linked in the Senate, because the Senate doesn’t have the same rules as the House does. The bill doesn’t have to go back to committee to be linked to the sales tax issue; [that sort of amendment] can be added on the Senate floor. So catalogers should still be very concerned.”

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