Tax Development Feb 13, 2016
The Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644), which faltered at the end of last year, passed overwhelmingly in the Senate on Thursday, February 11th, in a 75-20 vote. While dealing primarily with tougher enforcement of duties on foreign goods, contained in the last section under “Miscellaneous Provisions,” the Act provides for a permanent ban on state and local taxation of Internet access.
At the end of 2015 as part of a separate omnibus spending bill, Congress extended, yet again, a temporary moratorium on new taxes to Internet access. The temporary moratorium has been repeatedly extended since its creation in 1998, always with similar extensions of the grandfather clause protecting those states that taxed Internet access prior to the start of the ban.1
In its latest and possibly final form, the moratorium permanently bans the imposition of any new state and local taxes on Internet access and gives those currently grandfathered states (Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin) until June 30, 2020, to phase out such taxes. The legislation is currently awaiting President Obama’s signature.
1 The Internet Tax Nondiscrimination Act (P.L. 107-75), enacted in 2001, was the first extension of ITFA. In 2004, the Internet Tax Nondiscrimination Act (ITNA; P.L. 108-435) extended the Internet tax moratorium through November 1, 2007. The Internet Tax Freedom Act Amendments Act of 2007 (P.L. 110-108) extended the Internet tax moratorium and the original grandfather clause through November 1, 2014. As part of a continuing appropriations resolution (P.L. 113-164) enacted in 2014, the Internet tax moratorium and the grandfather clause protections were extended through December 11, 2014. The Consolidated and Further Continuing Appropriations Act of 2015 (P.L. 113-235) extended the Internet tax moratorium and the grandfather clause protections through October 1, 2015. In the 114th Congress, ITFA was extended through December 11, 2015, as part of the 2016 Continuing Appropriation Act (P.L. 114-53). The passage of H.R. 2029, the Consolidated Appropriations Act for 2016, extended the moratorium until October 2016.
TECHNICAL INFORMATION CONTACT:
Jeremiah T. Lynch
Principal
Ryan
212.871.3901
jeremiah.lynch@ryan.com