Number: RL33261
Title: Internet Taxation: Issues and Legislation
Authors: Steven Maguire and Nonna A. Noto, Government and Finance Division 
Abstract: Congress is involved in issues of state and local taxation of Internet transactions because commerce conducted by parties in different states over the Internet falls under the Commerce Clause of the Constitution. Currently, the "Internet Tax Moratorium" prohibits (1) new taxes on Internet access services and (2) multiple or discriminatory taxes on Internet commerce. The moratorium was created by the Internet Tax Freedom Act (ITFA) of 1998 (112 Stat. 2681) and has been extended twice. The original moratorium expired on October 21, 2001. Congress extended the moratorium through November 1, 2003, with the Internet Tax Nondiscrimination Act, P.L. 107-75. The moratorium was extended for an additional four years, through November 1, 2007, by the Internet Tax Nondiscrimination Act, P.L. 108-435. On October 31, 2007, P.L. 110-108, the Internet Tax Freedom Act Amendments Act of 2007 was passed extending the moratorium through November 1, 2014. Generally, taxes on Internet access that have continued in place since before October 1, 1998, are protected by a grandfather clause.
Pages: 11
Date: July 7, 2008