On June 8, the U.S. House of Representatives passed the Permanent Internet Tax Freedom Act (H.R. 235), a bill that would both permanently prohibit states from taxing access to the Internet and prohibit taxes on bandwidth and e-mail, according to media reports.
News of the bill’s passage in the House prompted U.S. Senate co-sponsors of the Marketplace Fairness Act, a bill that would give states the right to require remote retailers to collect and remit sales tax, to urge Congress to address sales tax inequity with the same urgency. The Permanent Internet Tax Freedom Act now goes to the Senate.
“I support extending the moratorium on state and local taxes on Internet access and agree that it is an issue Congress needs to take up this year,” said Sen. Michael Enzi (R-WY). “When we do, we should also consider legislation to restore states’ sovereign rights to enforce state and local sales and use tax laws. Our bill, the Marketplace Fairness Act, would allow states, if they choose to do so, to have out-of-state retailers collect the sales tax that is due on all sales — online sales, catalog sales, and in-store sales.”
The Marketplace Fairness Act passed the Senate in the last Congress with the bipartisan support of 69 senators. Enzi noted, “The Senate should move it and the Internet Tax Freedom Act together.” Congress has passed temporary Internet access tax moratoriums since 1998. The present moratorium is set to expire October 1, as reported by ComputerWorld.com.
Sen. Dick Durbin (D-IL) said he supports extending the moratorium on Internet access taxes, but that Congress must also level the playing field for Main Street retailers. “We should give states the ability to collect sales and use taxes already owed on all sales — both Internet and bricks-and-mortar sales. I hope we can move both measures as soon as possible.”
The Retail Industry Leaders Association also called on the Senate to pass Internet sales tax legislation in addition to the moratorium. “Sales tax parity should be addressed as part of legislation extending the moratorium on taxing Internet access,” Jennifer Safavian, the group’s executive vice president for government affairs, told ComputerWorld.com. “Retailers support keeping Internet access tax free while closing the online loophole that essentially subsidizes online-only retailers against their bricks-and-mortar competitors.”