Spending Bill Extends Ban on Internet Tax, Again

An extension until October 1, 2015 of a ban on taxing Internet access was included in the $1.1 trillion government funding bill passed by the House and the Senate. The Internet Tax Freedom Act (ITFA) is often misunderstood as prohibiting tax on sales made via the Internet, but it actually only prohibits tax being imposed on the purchase of Internet access services and similar transactions. This is now the fourth time since it was originally passed in 1998 that the ITFA has been extended. (See our previous post about ITFA here.) Proponents of the Marketplace Fairness Act (MFA) attempted to tie together the renewal of ITFA with legislation making it easier for states to collect sales tax on remote sales made by Internet retailers. MFA passed the Senate, but was shut down in the House by Speaker of the House John Boehner. (See our previous post about MFA here.)

Following the inclusion of ITFA’s extension in the funding bill, Ron Wyden, who originally wrote the ITFA, stated: “A fair open Internet is an engine of economic growth in America, a launching pad for entrepreneurs and history’s most powerful tool of communication. By extending this bill, the Congress has, for the short term, ensured that this longstanding policy keeps Internet access tax-free. I’m going to continue fighting to ensure that these protections will bolster the digital economy for the long-term.”

The government funding bill is expected to be signed into law by President Obama. For any questions, please contact Steve Dimengo, Rich Fry, or Casey Davis.

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