Judiciary Rushes Through Ban on Taxing Internet Access [5]

On Wednesday, June 18, the U.S. House of Representatives Judiciary Committee approved the Permanent Internet Tax Freedom Act (PITFA, H.R. 3086), which places a ban on state and local taxation of Internet access, by a vote of 30–4. The same day, the Marketplace Fairness Coalition urged the Committee leadership to treat e-fairness with the same sense of urgency as it did PITFA.

In the meantime, it is likely that the “key senators” will add sales tax fairness to PITFA when the bill heads to the U.S. Senate for consideration, according to the Wall Street Journal [7]. The Marketplace Fairness Act passed the Senate overwhelmingly in May 2013.

In a June 18 letter to Judiciary Chairman Bob Goodlatte (R-VA) and Ranking Member John Conyers (D-MI), the Marketplace Fairness Coalition called on the “committee to expedite consideration of legislation that will address other issues related to state taxation, most importantly legislation to level the playing field for all sellers and give states the ability to collect the sales and use taxes currently owed.”

According to the Washington Council Ernst & Young Tax Legislative Alert (WCEY Alert), several committee members from both parties asked the committee to consider sales tax fairness, including Congressman Conyers, who called for the committee to mark up the Marketplace Fairness Act. However, the chairman deflected the request, noting that the committee most move to other bills in a “measured way” and that he did not want to bog down PITFA since it has an expiration date of November 1.

“While there are a number of tax bills in Congress, the House and Senate should pass a stand-alone PITFA as soon as possible,” said Chairman Goodlatte in his opening remarks [8]. “In the past, the moratorium has lapsed and been extended retroactively, but this time around, the consequences of a lapse would be worse. There are many more Internet users today and the scope of the moratorium has become broader as the result of some of the more recent extensions. Any lapse would be felt more widely and acutely and refunds would be more difficult to administer.”

According to WCEY Alert, Congress Jason Chaffetz (R-UT), who is drafting sales tax fairness legislation, urged the House to debate sales tax fairness sooner rather than later but did not provide a possible time frame for when he would introduce his bill.