[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 442 Reported in Senate (RS)]






                                                       Calendar No. 509
105th CONGRESS
  2d Session
                                 S. 442

                          [Report No. 105-184]

                          [Report No. 105-276]

   To establish a national policy against State and local government 
 interference with interstate commerce on the Internet or interactive 
  computer services, and to exercise Congressional jurisdiction over 
 interstate commerce by establishing a moratorium on the imposition of 
 exactions that would interfere with the free flow of commerce via the 
                   Internet, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 13, 1997

 Mr. Wyden (for himself, Mr. Kerry, Mr. Burns, Mr. McCain, Mr. Shelby, 
 Mrs. Murray, Mr. Ashcroft, Mr. Faircloth, Mr. Leahy, Mrs. Boxer, and 
  Mr. Warner) introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

                              May 5, 1998

               Reported by Mr. McCain, with an amendment
 [Strike all after the enacting clause and insert the part printed in 
                                italic]

                             July 21, 1998

    Ordered referred to the Committee on Finance until the close of 
                       business on July 30, 1998

                             July 30, 1998

                Reported by Mr. Roth, with an amendment
[Omit the part in boldface brackets and insert the part printed in bold 
                                italic]

_______________________________________________________________________

                                 A BILL


 
   To establish a national policy against State and local government 
 interference with interstate commerce on the Internet or interactive 
  computer services, and to exercise Congressional jurisdiction over 
 interstate commerce by establishing a moratorium on the imposition of 
 exactions that would interfere with the free flow of commerce via the 
                   Internet, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Internet Tax Freedom 
Act''.</DELETED>

<DELETED>SEC. 2. FINDINGS.</DELETED>

<DELETED>    The Congress finds the following:</DELETED>
        <DELETED>    (1) As a massive global network spanning not only 
        State but international borders, the Internet is inherently a 
        matter of interstate and foreign commerce within the 
        jurisdiction of the United States Congress under Article I, 
        Section 8 of the United States Constitution.</DELETED>
        <DELETED>    (2) Even within the United States, the Internet 
        does not respect State lines and operates independently of 
        State boundaries. Addresses on the Internet are designed to be 
        geographically indifferent. Internet transmissions are 
        insensitive to physical distance and can have multiple 
        geographical addresses.</DELETED>
        <DELETED>    (3) Because transmissions over the Internet are 
        made through packet-switching it is impossible to determine 
        with any degree of certainty the precise geographic route or 
        endpoints of specific Internet transmissions and infeasible to 
        separate intrastate from interstate, and domestic from foreign, 
        Internet transmissions.</DELETED>
        <DELETED>    (4) Inconsistent and inadministrable taxes imposed 
        on Internet activity by State and local governments threaten 
        not only to subject consumers, businesses, and other users 
        engaged in interstate and foreign commerce to multiple, 
        confusing, and burdensome taxation, but also to restrict the 
        growth and continued technological maturation of the Internet 
        itself, and to call into question the continued viability of 
        this dynamic medium.</DELETED>
        <DELETED>    (5) Because the tax laws and regulations of so 
        many jurisdictions were established long before the Internet or 
        interactive computer services, their application to this new 
        medium in unintended and unpredictable ways threatens every 
        Internet user, access provider, vendor, and interactive 
        computer service provider.</DELETED>
        <DELETED>    (6) The electronic marketplace of services, 
        products, and ideas available through the Internet or 
        interactive computer services can be especially beneficial to 
        senior citizens, the physically challenged, citizens in rural 
        areas, and small businesses. It also offers a variety of uses 
        and benefits for educational institutions and charitable 
        organizations.</DELETED>
        <DELETED>    (7) Consumers, businesses, and others engaging in 
        interstate and foreign commerce through the Internet or 
        interactive computer services could become subject to more than 
        30,000 separate taxing jurisdictions in the United States 
        alone.</DELETED>
        <DELETED>    (8) The consistent and coherent national policy 
        regarding taxation of Internet activity, and the concomitant 
        uniformity, simplicity, and fairness that is needed to avoid 
        burdening this evolving form of interstate and foreign commerce 
        can best be achieved by the United States exercising its 
        authority under Article I, Section 8, Clause 3 of the United 
        States Constitution.</DELETED>

<DELETED>SEC. 3. MORATORIUM ON IMPOSITION OF TAXES ON INTERNET OR 
              INTERACTIVE COMPUTER SERVICES.</DELETED>

<DELETED>    (a) Moratorium.--Except as otherwise provided in this 
section, no State or political subdivision thereof may impose, assess, 
or attempt to collect a tax directly or indirectly on--</DELETED>
        <DELETED>    (1) the Internet or interactive computer services; 
        or</DELETED>
        <DELETED>    (2) the use of the Internet or interactive 
        computer services.</DELETED>
<DELETED>    (b) Preservation of State and Local Taxing Authority.--
Subsection (a)--</DELETED>
        <DELETED>    (1) does not apply to taxes imposed on or measured 
        by net income derived from the Internet or interactive computer 
        services;</DELETED>
        <DELETED>    (2) does not apply to fairly apportioned business 
        license taxes applied to businesses having a business location 
        in the taxing jurisdiction; and</DELETED>
        <DELETED>    (3) does not affect a State or political 
        subdivision thereof's authority to impose a sales or use tax on 
        sales or other transactions effected by use of the Internet or 
        interactive computer services if--</DELETED>
                <DELETED>    (A) the tax is the same as the tax 
                generally imposed and collected by that State or 
                political subdivision thereof on interstate sales or 
                transactions effected by mail order, telephone, or 
                other remote means within its taxing jurisdiction; 
                and</DELETED>
                <DELETED>    (B) the obligation to collect the tax from 
                sales or other transactions effected by use of the 
                Internet or interactive computer services is imposed on 
                the same person or entity as in the case of sales or 
                transactions effected by mail order, telephone, or 
                other remote means.</DELETED>

<DELETED>SEC. 4. ADMINISTRATION POLICY RECOMMENDATIONS TO 
              CONGRESS.</DELETED>

<DELETED>    (a) Consultative Group.--The Secretaries of the Treasury, 
Commerce, and State, in consultation with appropriate committees of the 
Congress, consumer and business groups, States and political 
subdivisions thereof, and other appropriate groups, shall--</DELETED>
        <DELETED>    (1) undertake an examination of United States and 
        international taxation of the Internet and interactive computer 
        services, as well as commerce conducted thereon; and</DELETED>
        <DELETED>    (2) jointly submit appropriate policy 
        recommendations concerning United States domestic and foreign 
        policies toward taxation of the Internet and interactive 
        computer services, if any, to the President within 18 months 
        after the date of enactment of this Act.</DELETED>
<DELETED>    (b) President.--Not later than 2 years after the date of 
enactment of this Act, the President shall transmit to the appropriate 
committees of Congress policy recommendations on the taxation of sales 
and other transactions effected on the Internet or through interactive 
computer services.</DELETED>
<DELETED>     (c) Recommendations to Be Consistent With 
Telecommunications Act of 1996 Policy Statement.--The Secretaries and 
the President shall take care to ensure that any such policy 
recommendations are fully consistent with the policy set forth in 
paragraphs (1) and (2) of section 230(b) of the Communications Act of 
1934 (47 U.S.C. 230(b)).</DELETED>

<DELETED>SEC. 5. DECLARATION THAT THE INTERNET BE FREE OF FOREIGN 
              TARIFFS, TRADE BARRIERS, AND OTHER 
              RESTRICTIONS.</DELETED>

<DELETED>    It is the sense of the Congress that the President should 
seek bilateral and multilateral agreements through the World Trade 
Organization, the Organization for Economic Cooperation and 
Development, the Asia Pacific Economic Cooperation Council, or other 
appropriate international fora to establish that activity on the 
Internet and interactive computer services is free from tariff and 
taxation.</DELETED>

<DELETED>SEC. 6. DEFINITIONS.</DELETED>

<DELETED>    For purposes of this Act--</DELETED>
        <DELETED>    (1) Internet; interactive computer service.--The 
        terms ``Internet'' and ``interactive computer service'' have 
        the meaning given such terms by paragraphs (1) and (2), 
        respectively, of section 230(e) of the Communications Act of 
        1934 (47 U.S.C. 230(e)).</DELETED>
        <DELETED>    (2) Tax.--The term ``tax'' includes any tax, 
        license, or fee that is imposed by any governmental entity, and 
        includes the imposition on the seller of an obligation to 
        collect and remit a tax imposed on the buyer.</DELETED>

[SECTION 1. SHORT TITLE.

    [This Act may be cited as the ``Internet Tax Freedom Act''.

[SEC. 2. FINDINGS.

    [The Congress finds the following:
            [(1) As a massive global network spanning not only State 
        but international borders, the Internet and the related 
        provision of online services and Internet access service are 
        inherently a matter of interstate and foreign commerce within 
        the jurisdiction of the United States Congress under Article I, 
        section 8, clause 3 of the United States Constitution.
            [(2) Even within the United States, the Internet does not 
        respect State lines and operates independently of State 
        boundaries. Addresses on the Internet are designed to be 
        geographically indifferent. Internet transmissions are 
        insensitive to physical distance and can have multiple 
        geographical addresses.
            [(3) Because transmissions over the Internet are made using 
        computer protocols, in particular the Transmission Control 
        Protocol / Internet Protocol, that utilize packet-switching 
        technology it is impossible to determine in advance the precise 
        geographic route individual Internet transmissions will travel 
        over, and it is therefore infeasible to separate domestic 
        intrastate Internet transmissions from interstate and foreign 
        Internet transmissions.
            [(4) Consumers, businesses, and others engaging in 
        interstate and foreign commerce through online services and 
        Internet access service could become subject to more than 
        30,000 separate taxing jurisdictions in the United States 
        alone.
            [(5) Inconsistent and inadministerable taxes imposed on 
        online services and Internet access service by State and local 
        governments threaten to--
                    [(A) subject consumers, businesses, and other users 
                engaged in interstate and foreign commerce to multiple, 
                confusing, and burdensome taxation,
                    [(B) restrict the growth and continued 
                technological maturation of the Internet itself, and
                    [(C) call into question the continued viability of 
                this dynamic medium.
            [(6) Because the tax laws and regulations of so many 
        jurisdictions were established long before the advent of the 
        Internet, online services, and Internet access service, their 
        application to this new medium and services in unintended and 
        unpredictable ways could prove to be an unacceptable burden on 
        the interstate and foreign commerce of the Nation.
            [(7) The electronic marketplace of services, products, and 
        ideas available through the Internet can be especially 
        beneficial to senior citizens, the physically challenged, 
        citizens in rural areas, and small businesses. It also offers a 
        variety of uses and benefits for educational institutions and 
        charitable organizations.
            [(8) A consistent and coherent national policy regarding 
        taxation of online services, Internet access service, and 
        communications and transactions using the Internet, and the 
        concomitant uniformity, simplicity, and fairness that is needed 
        to avoid burdening this evolving form of interstate and foreign 
        commerce, can best be achieved by the United States exercising 
        its authority under Article I, section 8, clause 3 of the 
        United States Constitution.

[SEC. 3. MORATORIUM ON IMPOSITION OF TAXES ON THE INTERNET, ONLINE 
              SERVICES, OR INTERNET ACCESS SERVICE.

    [(a) Moratorium.--Except as otherwise provided in this Act, prior 
to January 1, 2004, no State or political subdivision thereof may 
impose, assess, or attempt to collect any tax on--
            [(1) communications or transactions using the Internet; and
            [(2) online services or Internet access service.
    [(b) Preservation of State and Local Taxing Authority.--Subsection 
(a) shall not--
            [(1) affect the authority of a State, or a political 
        subdivision thereof, to impose a sales, use, or other 
        transaction tax on online services, Internet access service, or 
        communications or transactions using the Internet if--
                    [(A) the tax (including the rate at which it is 
                imposed) is the same as the tax generally imposed and 
                collected by that State or political subdivision 
                thereof in the case of similar sales, use, or 
                transactions not using the Internet, online services, 
                or Internet access service; and
                    [(B) the obligation to collect or pay the tax from 
                sales or other transactions using the Internet, online 
                services, or Internet access service is imposed on the 
                same person or entity as in the case of similar sales, 
                use, or transactions not using the Internet, online 
                services, or Internet access service;
            [(2) apply to taxes imposed on or measured by gross or net 
        income derived from online services, Internet access service, 
        or communications or transactions using the Internet, or on 
        value added, net worth, or capital stock;
            [(3) apply to fairly apportioned business license taxes;
            [(4) apply to taxes paid by a provider or user of online 
        services or Internet access service as a consumer of goods and 
        services not otherwise excluded from taxation pursuant to this 
        Act;
            [(5) apply to property taxes imposed or assessed on 
        property owned or leased by a provider or user of online 
        services or Internet access service;
            [(6) apply to taxes imposed on or collected by a common 
        carrier, as defined in section 3 of the Communications Act of 
        1934 (47 U.S.C. 153), acting in its capacity as a common 
        carrier;
            [(7) apply to taxes imposed on or collected by a provider 
        of telecommunications service, as that term is defined in 
        section 3 of the Communications Act of 1934 (47 U.S.C. 153); or
            [(8) apply to franchise fees imposed by a State or local 
        franchising authority, pursuant to sections 622 or 653 of the 
        Communications Act of 1934 (47 U.S.C. 622 or 573), for the 
        provision of cable services, as those terms are defined by such 
        Act.

[SEC. 4. ADMINISTRATION POLICY RECOMMENDATIONS TO CONGRESS.

    [(a) Consultative Group.--The Secretaries of the Treasury, 
Commerce, and State, in consultation with appropriate committees of the 
Congress, the National Tax Association-sponsored Joint Communications 
and Electronic Commerce Tax Project and the National Conference of 
Commissioners of Uniform State Laws, consumer and business groups, 
States and political subdivisions thereof, and other appropriate 
groups, shall--
            [(1) undertake an examination of United States domestic and 
        international taxation of--
                    [(A) communications and transactions using the 
                Internet,
                    [(B) online services and Internet access service, 
                and
                    [(C) the telecommunications infrastructure used by 
                the Internet, online services, and Internet access 
                service;
            [(2) consider any specific proposals made by the Joint 
        Communications and Electronic Commerce Tax Project and the 
        National Conference of Commissioners of Uniform State Laws 
        concerning appropriate parameters for taxation by States, and 
        political subdivisions thereof, of matters described in 
        paragraph (1); and
            [(3) jointly submit appropriate policy recommendations 
        concerning United States domestic and foreign policies toward 
        taxation of online services, Internet access service, and 
        communications and transactions using the Internet, if any, to 
        the President within 18 months after the date of enactment of 
        this Act.
    [(b) President.--Not later than 2 years after the date of enactment 
of this Act, the President shall, to the extent and in the form the 
President deems appropriate, transmit to the appropriate committees of 
Congress policy recommendations on taxation of online services, 
Internet access service, and communications and transactions using the 
Internet.

[SEC. 5. DECLARATION THAT THE INTERNET SHOULD BE FREE OF FOREIGN 
              TARIFFS, TRADE BARRIERS, AND OTHER RESTRICTIONS.

    [It is the sense of the Congress that the President should seek 
bilateral and multilateral agreements through the World Trade 
Organization, the Organization for Economic Cooperation and 
Development, the Asia Pacific Economic Cooperation Council, and other 
appropriate international fora to establish that commercial 
transactions using the Internet are free from tariff and taxation.

[SEC. 6. DEFINITIONS.

    [For the purposes of this Act--
            [(1) Internet.--The term ``Internet'' means collectively 
        the myriad of computer and telecommunications facilities, 
        including equipment and operating software, which comprise the 
        interconnected world-wide network of networks that employ the 
        Transmission Control Protocol / Internet Protocol, or any 
        predecessor or successor protocols to such protocol, to 
        communicate information of all kinds by wire or radio.
            [(2) Online services.--The term ``online services'' means 
        the offering or provision of information, information 
        processing, and products or services to a user as part of a 
        package of services that are combined with Internet access 
        service and offered to the user for a single price.
            [(3) Internet access service.--The term ``Internet access 
        service'' means the offering or provision of the storage, 
        computer processing, and transmission of information that 
        enables the user to make use of resources found via the 
        Internet.
            [(4) Tax--The term ``tax'' includes any charge imposed by 
        legislative authority to raise revenue for the needs of the 
        public, as well as any license or fee that is imposed by any 
        governmental entity. Such term also includes the imposition on 
        the seller of an obligation to collect and remit to a 
        governmental entity any charge (as defined in the preceding 
        sentence), license, or fee imposed on the buyer by a 
        governmental entity.]

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Tax Freedom Act''.

                  TITLE I--MORATORIUM ON CERTAIN TAXES

SEC. 101. MORATORIUM.

    (a) Moratorium.--No State or political subdivision thereof shall 
impose any of the following taxes on transactions occurring during the 
period beginning on July 29, 1998, and ending 2 years after the date of 
the enactment of this Act:
            (1) Taxes on Internet access.
            (2) Bit taxes.
            (3) Multiple or discriminatory taxes on electronic 
        commerce.
    (b) Application of Moratorium.--Subsection (a) shall not apply with 
respect to the provision of Internet access that is offered for sale as 
part of a package of services that includes services other than 
Internet access, unless the service provider separately states that 
portion of the billing that applies to such services on the user's 
bill.

SEC. 102. ADVISORY COMMISSION ON ELECTRONIC COMMERCE.

    (a) Establishment of Commission.--There is established a commission 
to be known as the Advisory Commission on Electronic Commerce (in this 
title referred to as the ``Commission''). The Commission shall--
            (1) be composed of 16 members appointed in accordance with 
        subsection (b), including the chairperson who shall be selected 
        by the members of the Commission from among themselves; and
            (2) conduct its business in accordance with the provisions 
        of this title.
    (b) Membership.--
            (1) In general.--The Commissioners shall serve for the life 
        of the Commission. The membership of the Commission shall be as 
        follows:
                    (A) Four representatives from the Federal 
                Government comprised of the Secretary of Commerce, the 
                Secretary of State, the Secretary of the Treasury, and 
                the United States Trade Representative, or their 
                respective representatives.
                    (B) Six representatives from State and local 
                governments comprised of--
                            (i) two representatives appointed by the 
                        Majority Leader of the Senate;
                            (ii) one representative appointed by the 
                        Minority Leader of the Senate;
                            (iii) two representatives appointed by the 
                        Speaker of the House of Representatives; and
                            (iv) one representative appointed by the 
                        Minority Leader of the House of 
                        Representatives.
                    (C) Six representatives of the electronic industry 
                and consumer groups comprised of--
                            (i) two representatives appointed by the 
                        Majority Leader of the Senate;
                            (ii) one representative appointed by the 
                        Minority Leader of the Senate;
                            (iii) two representatives appointed by the 
                        Speaker of the House of Representatives; and
                            (iv) one representative appointed by the 
                        Minority Leader of the House of 
                        Representatives.
            (2) Appointments.--Appointments to the Commission shall be 
        made not later than 45 days after the date of the enactment of 
        this Act. The chairperson shall be selected not later than 60 
        days after the date of the enactment of this Act.
            (3) Vacancies.--Any vacancy in the Commission shall not 
        affect its powers, but shall be filled in the same manner as 
        the original appointment.
    (c) Acceptance of Gifts and Grants.--The Commission may accept, 
use, and dispose of gifts or grants of services or property, both real 
and personal, for purposes of aiding or facilitating the work of the 
Commission. Gifts or grants not used at the expiration of the 
Commission shall be returned to the donor or grantor.
    (d) Other Resources.--The Commission shall have reasonable access 
to materials, resources, data, and other information from the 
Department of Justice, the Department of Commerce, the Department of 
State, the Department of the Treasury, and the Office of the United 
States Trade Representative. The Commission shall also have reasonable 
access to use the facilities of any such Department or Office for 
purposes of conducting meetings.
    (e) Sunset.--The Commission shall terminate 18 months after the 
date of the enactment of this Act.
    (f) Rules of the Commission.--
            (1) Quorum.--Nine members of the Commission shall 
        constitute a quorum for conducting the business of the 
        Commission.
            (2) Meetings.--Any meetings held by the Commission shall be 
        duly noticed at least 14 days in advance and shall be open to 
        the public.
            (3) Opportunities to testify.--The Commission shall provide 
        opportunities for representatives of the general public, 
        taxpayer groups, consumer groups, and State and local 
        government officials to testify.
            (4) Additional rules.--The Commission may adopt other rules 
        as needed.
    (g) Duties of the Commission.--
            (1) In general.--The Commission shall conduct a thorough 
        study of Federal, State and local, and international taxation 
        and tariff treatment of transactions using the Internet and 
        Internet access and other comparable interstate or 
        international sales activities.
            (2) Issues to be studied.--The Commission may include in 
        the study under subsection (a)--
                    (A) an examination of--
                            (i) barriers imposed in foreign markets on 
                        United States providers of property, goods, 
                        services, or information engaged in electronic 
                        commerce and on United States providers of 
                        telecommunications services; and
                            (ii) how the imposition of such barriers 
                        will affect United States consumers, the 
                        competitiveness of United States citizens 
                        providing property, goods, services, or 
                        information in foreign markets, and the growth 
                        and maturing of the Internet;
                    (B) an examination of the collection and 
                administration of consumption taxes on interstate 
                commerce in other countries and the United States, and 
the impact of such collection on the global economy, including an 
examination of the relationship between the collection and 
administration of such taxes when the transaction uses the Internet and 
when it does not;
                    (C) an examination of the impact of the Internet 
                and Internet access (particularly voice transmission) 
                on the revenue base for taxes imposed under section 
                4251 of the Internal Revenue Code of 1986;
                    (D) an examination of--
                            (i) the efforts of State and local 
                        governments to collect sales and use taxes owed 
                        on purchases from interstate sellers, the 
                        advantages and disadvantages of authorizing 
                        State and local governments to require such 
                        sellers to collect and remit such taxes, 
                        particularly with respect to electronic 
                        commerce, and the level of contacts sufficient 
                        to permit a State or local government to impose 
                        such taxes on such interstate commerce;
                            (ii) model State legislation relating to 
                        taxation of transactions using the Internet and 
                        Internet access, including uniform terminology, 
                        definitions of the transactions, services, and 
                        other activities that may be subject to State 
                        and local taxation, procedural structures and 
                        mechanisms applicable to such taxation, and a 
                        mechanism for the resolution of disputes 
                        between States regarding matters of multiple 
                        taxation; and
                            (iii) ways to simplify the interstate 
                        administration of sales and use taxes on 
                        interstate commerce, including a review of the 
                        need for a single or uniform tax registration, 
                        single or uniform tax returns, simplified 
                        remittance requirements, simplified 
                        administrative procedures, or the need for an 
                        independent third party collection system; and
                    (E) the examination of ways to simplify Federal and 
                State and local taxes imposed on the provision of 
                telecommunications services.

SEC. 103. REPORT.

    Not later than 18 months after the date of the enactment of this 
Act, the Commission shall transmit to Congress a report reflecting the 
results of the Commission's study under this title. No finding or 
recommendation shall be included in the report unless agreed to by at 
least two-thirds of the members of the Commission serving at the time 
the finding or recommendation is made.

SEC. 104. DEFINITIONS.

    For the purposes of this title:
            (1) Bit tax.--The term ``bit tax'' means any tax on 
        electronic commerce expressly imposed on or measured by the 
        volume of digital information transmitted electronically, or 
        the volume of digital information per unit of time transmitted 
        electronically, but does not include taxes imposed on the 
provision of telecommunications services.
            (2) Discriminatory tax.--The term ``discriminatory tax'' 
        means any tax imposed by a State or political subdivision 
        thereof on electronic commerce that--
                    (A) is not generally imposed and legally 
                collectible by such State or such political subdivision 
                on transactions involving the same or similar property, 
                goods, services, or information accomplished through 
                other means;
                    (B) is not generally imposed and legally 
                collectible at the same rate by such State or such 
                political subdivision on transactions involving the 
                same or similar property, goods, services, or 
                information accomplished through other means, unless 
                the rate is lower as part of a phase-out of the tax 
                over not more than a 5-year period; or
                    (C) imposes an obligation to collect or pay the tax 
                on a different person or entity than in the case of 
                transactions involving the same or similar property, 
                goods, services, or information accomplished through 
                other means.
            (3) Electronic commerce.--The term ``electronic commerce'' 
        means any transaction conducted over the Internet or through 
        Internet access, comprising the sale, lease, license, offer, or 
        delivery of property, goods, services, or information, whether 
        or not for consideration, and includes the provision of 
        Internet access.
            (4) Internet.--The term ``Internet'' means the combination 
        of computer facilities and electromagnetic transmission media, 
        and related equipment and software, comprising the 
        interconnected worldwide network of computer networks that 
        employ the Transmission Control Protocol/Internet Protocol, or 
        any predecessor or successor protocol, to transmit information.
            (5) Internet access.--The term ``Internet access'' means a 
        service that enables users to access content, information, 
        electronic mail, or other services offered over the Internet, 
        and may also include access to proprietary content, 
        information, and other services as part of a package of 
        services offered to consumers. Such term does not include 
        telecommunications services.
            (6) Multiple tax.--
                    (A) In general.--The term ``multiple tax'' means 
                any tax that is imposed by one State or political 
                subdivision thereof on the same or essentially the same 
                electronic commerce that is also subject to another tax 
                imposed by another State or political subdivision 
                thereof (whether or not at the same rate or on the same 
                basis), without a credit (for example, a resale 
                exemption certificate) for taxes paid in other 
                jurisdictions.
                    (B) Exception.--Such term shall not include a sales 
                or use tax imposed by a State and 1 or more political 
                subdivisions thereof on the same electronic commerce or 
                a tax on persons engaged in electronic commerce which 
                also may have been subject to a sales or use tax 
                thereon.
                    (C) Sales or use tax.--For purposes of subparagraph 
                (B), the term ``sales or use tax'' means a tax that is 
                imposed on or incident to the sale, purchase, storage, 
                consumption, distribution, or other use of tangible 
                personal property or services as may be defined by laws 
                imposing such tax and which is measured by the amount 
                of the sales price or other charge for such property or 
                service.
            (7) State.--The term ``State'' means any of the several 
        States, the District of Columbia, or any commonwealth, 
        territory, or possession of the United States.
            (8) Tax.--
                    (A) In general.--The term ``tax'' means--
                            (i) any levy, fee, or charge imposed under 
                        governmental authority by any governmental 
                        entity; or
                            (ii) the imposition of or obligation to 
                        collect and to remit to a governmental entity 
                        any such levy, fee, or charge imposed by a 
                        governmental entity.
                    (B) Exception.--Such term shall not include any 
                franchise fees or similar fees imposed by a State or 
                local franchising authority, pursuant to section 622 or 
                653 of the Communications Act of 1934 (47 U.S.C. 542, 
                573).
            (9) Telecommunications services.--The term 
        ``telecommunications services'' has the meaning given such term 
        in section 3(46) of the Communications Act of 1934 (47 U.S.C. 
        153(46)) and includes communications services (as defined in 
        section 4251 of the Internal Revenue Code of 1986).

                       TITLE II--OTHER PROVISIONS

SEC. 201. DECLARATION THAT INTERNET SHOULD BE FREE OF NEW FEDERAL 
              TAXES.

    It is the sense of Congress that no new Federal taxes similar to 
the taxes described in section 101(a) should be enacted with respect to 
the Internet and Internet access during the moratorium provided in such 
section.

SEC. 202. NATIONAL TRADE ESTIMATE.

    Section 181 of the Trade Act of 1974 (19 U.S.C. 2241) is amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (A)--
                            (i) by striking ``and'' at the end of 
                        clause (i);
                            (ii) by inserting ``and'' at the end of 
                        clause (ii); and
                            (iii) by inserting after clause (ii) the 
                        following new clause:
                            ``(iii) United States electronic 
                        commerce,''; and
                    (B) in subparagraph (C)--
                            (i) by striking ``and'' at the end of 
                        clause (i);
                            (ii) by inserting ``and'' at the end of 
                        clause (ii);
                            (iii) by inserting after clause (ii) the 
                        following new clause:
                            ``(iii) the value of additional United 
                        States electronic commerce,''; and
                            (iv) by inserting ``or transacted with,'' 
                        after ``or invested in'';
            (2) in subsection (a)(2)(E)--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) by inserting ``and'' at the end of clause (ii); 
                and
                    (C) by inserting after clause (ii) the following 
                new clause:
                            ``(iii) the value of electronic commerce 
                        transacted with,''; and
            (3) by adding at the end the following new subsection:
    ``(d) Electronic Commerce.--For purposes of this section, the term 
`electronic commerce' has the meaning given that term in section 104(3) 
of the Internet Tax Freedom Act.''.

SEC. 203. DECLARATION THAT THE INTERNET SHOULD BE FREE OF FOREIGN 
              TARIFFS, TRADE BARRIERS, AND OTHER RESTRICTIONS.

    (a) In General.-- It is the sense of Congress that the President 
should seek bilateral, regional, and multilateral agreements to remove 
barriers to global electronic commerce through the World Trade 
Organization, the Organization for Economic Cooperation and 
Development, the Trans-Atlantic Economic Partnership, the Asia Pacific 
Economic Cooperation forum, the Free Trade Area of the America, the 
North American Free Trade Agreement, and other appropriate venues.
    (b) Negotiating Objectives.--The negotiating objectives of the 
United States shall be--
            (1) to assure that electronic commerce is free from--
                    (A) tariff and nontariff barriers;
                    (B) burdensome and discriminatory regulation and 
                standards; and
                    (C) discriminatory taxation; and
            (2) to accelerate the growth of electronic commerce by 
        expanding market access opportunities for--
                    (A) the development of telecommunications 
                infrastructure;
                    (B) the procurement of telecommunications 
                equipment;
                    (C) the provision of Internet access and 
                telecommunications services; and
                    (D) the exchange of goods, services, and 
                digitalized information.
    (c) Electronic Commerce.--For purposes of this section, the term 
``electronic commerce'' has the meaning given that term in section 
104(3).

SEC. 204. NO EXPANSION OF TAX AUTHORITY.

    Nothing in this Act shall be construed to expand the duty of any 
person to collect or pay taxes beyond that which existed immediately 
before the date of the enactment of this Act.

SEC. 205. PRESERVATION OF AUTHORITY.

    Nothing in this Act shall limit or otherwise affect the 
implementation of the Telecommunications Act of 1996 (Public Law 104-
104) or the amendments made by such Act.
                                    A





                                                       Calendar No. 509

105th CONGRESS

  2d Session

                                 S. 442

                          [Report No. 105-184]

                          [Report No. 105-276]

_______________________________________________________________________

                                 A BILL

   To establish a national policy against State and local government 
 interference with interstate commerce on the Internet or interactive 
  computer services, and to exercise Congressional jurisdiction over 
 interstate commerce by establishing a moratorium on the imposition of 
 exactions that would interfere with the free flow of commerce via the 
                   Internet, and for other purposes.

_______________________________________________________________________

                             July 30, 1998

                       Reported with an amendment