New Bill To Extend US Internet Tax Moratorium Goes Before the Senate

Mike Godfrey, Tax-news.com, Washington

13 March 2001

As US Internet and bricks-and-mortar retailers continue to bicker over Web taxation, and the Streamlined Sales Tax Project (SSTP) tries to put into place a system that radically simplifies sales and usage taxes, legislation to extend the Internet tax moratorium until the end of 2005 has been reintroduced by Senator Byron Dorgan.

The "Internet Tax Moratorium and Equity Act", would require uniform definitions for goods and services, identical procedures for the treatment of exempt purchasers, and uniform rules for attributing transactions to particular tax jurisdictions. The legislation would also ensure that sellers would not be subjected to conflicting state auditing procedures.

Addressing the Senate, Senator Dorgan said: 'We believe that the approach embraced in our bill would help create a climate in which Web-based firms and Main Street businesses can co-exist and compete on fair and even terms. Any new form of commerce presents a challenge to the rules and structures that have grown up around the old.'

This new bill differs from the one put forward by Senator Dorgan last year, which required states to adopt a single tax rate per state. The new legislation allows states to choose whether to have a single rate or allow vendors to calculate the tax. It seems it has met with approval from nearly all state and local organsiations.

The Senate Commerce Committee has scheduled a hearing in the coming days to discuss whether states should be given the opportunity to collect out-of-state sales taxes, once they have streamlined their systems.

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