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Short-term Extension For US Internet Tax Moratorium

by Mike Godfrey,, Washington

22 September 2014

The United States House of Representatives and the Senate have agreed a short-term extension to the Internet Tax Freedom Act until December 11, 2014.

The Republican-led House voted 319 to 108 to pass the continuing resolution on September 17, and, on the following day, the Senate followed suit with a vote of 73 to 22, so that both sides of Congress could go into recess until after November 4's midterm elections.

ITFA places a moratorium on the imposition by state or local governments of new taxes on internet access or multiple or discriminatory taxes on e-commerce, but was due to expire on November 1, 2014.

Originally passed in 1998, and extended three times since with broad bipartisan support, the ITFA's future had depended on bills presented in the House and the Senate, which both attempted to make the tax moratorium permanent. While the House passed its bill in July this year, the prospect of a "clean" permanent ITFA extension being passed in the Senate was complicated prior to the summer recess by certain lawmakers in the Senate, including its Majority Leader, Harry Reid (D – Nevada), who looked to link it to the more controversial Marketplace Fairness Act (MFA).

The MFA, which included provisions to allow states to impose sales taxes on online purchases, remains stuck in the House Judiciary Committee, mainly due to Republican concerns.

Just as the temporary government-spending extension, passed in the same resolution, has been put in place in the hope of allowing lawmakers time to sort out a longer-term arrangement when they return after the election, the short-term extension to ITFA could allow more time for the Democrat supporters of the MFA to seek its inclusion in a bill to further extend the ITFA.

TAGS: tax | business | sales tax | commerce | law | internet | e-commerce | United States | Tax

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