Academic journal article Journal of Accountancy

New Bill Would Freeze Internet Taxation

Academic journal article Journal of Accountancy

New Bill Would Freeze Internet Taxation

Article excerpt

Senator Ron Wyden (D-Ore.) and Congressman Christopher Cox (R-Cal.) introduced legislation that would impose an indefinite moratorium on state and local taxes on the Internet. The Internet Tax Freedom Act (HR 1054; S 442) also recommends that President Clinton bring together local governments, consumers, businesses and others to develop policy recommendations on taxing online commerce.

Business conducted over the Internet--including the sale of software, online newspapers and database services--generated $500 million in total receipts in 1995 and $1.1 billion in 1996. According to the Treasury Department, Internet commerce could grow to $70 billion by 2000. Wyden said that 20 states and the District of Columbia impose one or more taxes on electronic commerce. Many of the states include Internet access and services under existing tax regimes, such as telecommunications or sales and use taxes.

"The Net's decentralized, packet-switched architecture makes every transmission vulnerable to multiple taxation," said Cox. "Thirty thousand state and local tax authorities could potentially tax the Internet to death."

The four-part bill would

1. Prohibit state and local governments from imposing taxes on online services and access. It would grandfather existing taxes.

2. Direct the Clinton administration, in consultation with Congress, to study U. …

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