Should Internet Tax Freedom Be Linked to Internet Sales Tax?
- Jun 24, 2014 | Gail Cole
Last updated 9.30.2015: Congress approved by voice vote the Permanent Internet Tax Freedom Act on July 15, 2014. The bill was received in the Senate the next day. The bill died.
The House Judiciary Committee has approved the Permanent Internet Tax Freedom Act, which would “make permanent the ban on state and local taxation of Internet access and on multiple or discriminatory taxes on electronic commerce.” Only four members of the committee voted against H.R. 3086 on June 18, 2014, while thirty representatives voted in favor of the bill.
If approved by the remainder of the House, the measure will move to the Senate, where there is talk of combining it with online sales tax legislation. In May 2013, the Senate approved the Marketplace Fairness Act of 2013 (MFA)—legislation that would grant states the right to require out-of-state vendors to collect sales tax. Since then, it has been held up in the House.
In recent years, numerous states have created their own internet sales tax laws, also called Amazon taxes. These controversial laws often end up challenged in court. Federal legislation like the MFA would validate state laws and perhaps establish parameters for them.
Linking the future of the Permanent Internet Tax Freedom Act to online sales tax makes some in the field nervous, as the current Internet Tax Freedom Act expires on November 1, 2014. As the Wall Street Journal reports, “big telecommunications companies are preparing notices to send out to customers in the coming weeks, saying the possibility exists that they will have to start collecting state and local taxes on Internet access soon.”
Switch to an automated sales tax solution, and be prepared for any eventuality.