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Permanent Internet Tax Ban Looks Likely

  • Dec 11, 2015 | Gail Cole

 The time for Internet tax freedom may have arrived.

Update, 1.4.2016: The Internet Tax Freedom Act (ITFA) is now set to expire October 1, 2016. See H.R. 2029, Section 633.

Update: On December 11, President Obama signed H.R. 2250, the Further Continuing Appropriations Act of 2016, which extends the Internet Tax Freedom Act through Wednesday, December 16, 2015. As of this writing, ITFA is not made permanent.

The Internet Tax Freedom Act, which places a moratorium on taxing Internet access, is set to expire today, December 11, 2015. A permanent extension of the ban has persistently eluded lawmakers. Perhaps until now.

On Wednesday, a permanent extension of the Internet Tax Freedom Act was approved by a House-Senate conference committee. It is expected to pass.

Most states do not tax Internet access because the Internet was a fairly new phenomenon when the ban was first put in place in 1998. Therefore most states will not be affected by the ban becoming permanent.

However, seven states that did tax Internet access back in 1998 still do (the taxes were grandfathered in when the ban was established). The bipartisan legislation approved this week requires them to eliminate their taxes on Internet access by 2020.

If the ban sticks,  this would cost Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin hundreds of millions in tax revenue collectively, annually.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.