Legislative update - House approves permanent internet tax ban 

July 15:  The House today approved, by voice vote, H.R. 3086, the Permanent Internet Tax Freedom Act, which would make permanent a moratorium on state and local taxation of internet access and on multiple or discriminatory taxes on electronic commerce.

Current law, the Internet Tax Freedom Act (ITFA):

  • Prohibits state and local governments from imposing taxes on internet access and some taxes on electronic commerce until November 1, 2014
  • Contains a grandfather clause that allows some state and local governments to continue taxing internet access if such tax was generally imposed and actually enforced before October 1, 1998

H.R. 3086 would make permanent the moratorium and eliminate the grandfather clause.

Senate action

The Senate in May 2013 passed S. 743, the Marketplace Fairness Act.

S. 743 would allow states that undertake specific simplifications of their sales taxes to require sellers without physical presence to collect tax.

S. 743 would increase the sales and use tax compliance responsibilities for many remote sellers and for sellers that collect sales taxes only in states where they have a physical presence, but that make sales through various means into a larger number of states.

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