Indiana Outlaws Taxation of Internet Access

The governor of Indiana has signed into law legislation that prohibits the state from imposing taxes on Internet access, effective April 23, 2015.

SB 80 defines “Internet access” as a “service that enables users to connect to the Internet to access content, information, or other services offered over the Internet….” It also includes the following (taken directly from the bill):

• The purchase, use, or sale of communications services, including telecommunications services … to enable users to access content, information, or other services offered over the Internet.
• Services that are incidental to the provision of Internet access, when furnished to users as part of such service, including a home page, electronic mail and instant messaging, video clips and personal electronic storage capacity.
• A home page, electronic mail and instant messaging, video clips, and personal electronic storage capacity that are provided independently or that are not packaged with Internet access.

Internet access does not include audio, voice or video programming, and certain other products and services that use Internet protocol.

The bill defines “tax” as follows:

• Any charge that is imposed by the state or a political subdivision of the state for the purpose of generating revenues for governmental purposes and, except as provided in subsection (b), is not a fee imposed for the specific privilege, service, or benefit conferred; or
• The imposition on a seller of an obligation to collect and to remit to the state or a political subdivision of the state any gross retail tax, sales tax, or use tax imposed on a buyer by such a governmental entity.

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