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House of Representatives Passes Internet Tax Moratorium Bill

Mike Godfrey, Tax-news.com, Washington

11 May 2000

The US House of Representatives today followed the recommendations of the Advisory Commission on Electronic Commerce by passing by 352 votes to 75 bill HR 3709 extending the Internet tax moratorium for five years, prohibiting multiple or discriminatory taxes on electronic commerce and eliminating taxes on Internet access fees.

The Internet Tax Freedom Act which imposed the original, 3-year, moratorium in 1998 grandfathered existing taxation by states of Internet access. The new legislation, if signed into law, would extend the moratorium to October 2006 and would eliminate the grandfather provision.

"The House of Representatives' passage of this bill validates the Commission's work," said Virginia's Governor, Jim Gilmore, III, Chairman of the Advisory Commission. "The legislation ensures that transactions, whether they take place via telephone, catalog, or the Internet, are all treated in the same equitable manner. The House's action is a major victory for the American people who are logging on the Internet."

An amendment to HR3709 proposed by Representative Ernest Istook, (R-OK) also passed today, urging states and localities to work together to develop a non-multiple and non-discriminatory tax system, and encouraging states to promote uniformity, simplicity, and consistency in an electronic taxing system.

The bill now faces a more difficult, but not impossible, passage in the Senate, and can be vetoed by the President, although that would be an unpopular and unlikely thing for Bill Clinton to do in an election year.

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