Internet Moratorium Extended Two Years: Congress Fails to Resolve Tax Collection Issues

By Rigsby, Deborah | Nation's Cities Weekly, November 26, 2001 | Go to article overview
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Internet Moratorium Extended Two Years: Congress Fails to Resolve Tax Collection Issues


Rigsby, Deborah, Nation's Cities Weekly


The Senate voted on November 15 in favor of H.R. 1552, the "Internet Tax Nondiscrimination Act," a clean two-year extension of the existing moratorium without resolving the tax collection issues so important to cities. The original 1998 moratorium expired on October 21.

An amendment (similar to S. 1567), offered by Sens. Mike Enzi (R-Wyo.) and Byron Dorgan (D-N.D.), was tabled on a vote of 57-43. NLC worked with Enzi and Dorgan to perfect their alternative amendment and to try to meet the needs of cities throughout the country. The alternative would have endorsed sales tax simplification, and provided a positive trigger for states and local governments to secure approval for expanded duty to collect sales and use taxes on remote sales. However, the amendment only provided for state administration and collection of both state and local taxes on remote sales, which is unacceptable to cities in five states.

H.R. 1552 was passed by a voice vote of 57-43, immediately following the vote that tabled the Enzi-Dorgan amendment. This will restore, until November 1, 2003, the Internet Tax Moratorium law (PL 105-277) without making any progress toward resolution of the underlying sales and use tax collection issues so important to city revenues. President Bush is expected to sign the legislation very soon.

Passage of H.R. 1552 does not move cities toward a solution, and this postponement will continue to erode sales tax revenues. Fortunately, the legislation would not ban taxes on the Internet access fees currently collected by 11 states. This provision was stricken before H.R. 1552 was passed by the House of Representatives on October 16.

Senators Enzi and Dorgan worked very hard to garner support for their amendment.

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Internet Moratorium Extended Two Years: Congress Fails to Resolve Tax Collection Issues
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