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Janet Roberts

Internet Tax Moratorium Ended Sunday
By Janet Roberts

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Here's a heads-up to anyone whose sales on the Internet would be liable for taxes levied by U.S. state and local governments:

The three-year moratorium on taxing Internet commerce has ended, an apparent victim of neglect while Congress is preoccupied with anti-terrorism efforts and the anthrax scare.

The ban expired on Sunday. The House of Representatives had approved the Internet Tax Nondiscrimination Act (HR 1552), which would have extended the ban to 2003, but the Senate adjourned without action. Congress is out of session until Tuesday so that offices can be tested for anthrax.

What it means for those of you who sell things either in your newsletter or at a companion Web site is that state and local governments are now empowered to levy taxes on e-commerce.

Whether that will actually happen is another story, though. Lawmakers told the Associated Press last week that they didn't expect to see state and local governments put up a network of new taxes anytime soon.

The moratorium itself, a provision of the Internet Tax Freedom Act might not be so dead, either. According to a story in Friday's issue of Digital Coast Daily, U.S. Sens. Ron Wyden (D-Ore.), John McCain (R-Ariz.), and Patrick Leahy (D-Vt.) introduced Senate Bill 1481, the Internet Tax Moratorium Extension Act, to continue the current law that prevents governments from targeting the Internet for new kinds of taxes and new Internet access charges.

Proponents of an Internet tax ban say it's needed to promote the growth of e-commerce and to give the government time to develop a streamlined tax plan. However, state and local governments say they miss out on sales-tax revenues when consumers buy online.

In addition to taxes on goods and services sold over the Internet, some taxing authorities might also try to impose access taxes on Internet service providers.

"Taxpayers may soon see the cost of using the Internet skyrocket as state governments pounce on yet another area of our economy that they can tax," said Eric Schlecht of the National Taxpayers Union. "This is the last thing our country needs, especially with the recent economic slowdown."

Ezine-Tips for October 22, 2001

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