[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 150 Enrolled Bill (ENR)]
S.150
One Hundred Eighth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twentieth day of January, two thousand and four
An Act
To make permanent the moratorium on taxes on Internet access and
multiple and discriminatory taxes on electronic commerce imposed by the
Internet Tax Freedom Act.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Internet Tax Nondiscrimination
Act''.
SEC. 2. FOUR-YEAR EXTENSION OF INTERNET TAX MORATORIUM.
(a) In General.--Subsection (a) of section 1101 of the Internet Tax
Freedom Act (47 U.S.C. 151 note) is amended to read as follows:
``(a) Moratorium.--No State or political subdivision thereof may
impose any of the following taxes during the period beginning November
1, 2003, and ending November 1, 2007:
``(1) Taxes on Internet access.
``(2) Multiple or discriminatory taxes on electronic
commerce.''.
(b) Conforming Amendments.--(1) Section 1101 of the Internet Tax
Freedom Act (47 U.S.C. 151 note) is amended by striking subsection (d)
and redesignating subsections (e) and (f) as subsections (d) and (e),
respectively.
(2) Section 1104(10) of the Internet Tax Freedom Act (47 U.S.C. 151
note) is amended to read as follows:
``(10) Tax on internet access.--
``(A) In general.--The term `tax on Internet access' means
a tax on Internet access, regardless of whether such tax is
imposed on a provider of Internet access or a buyer of Internet
access and regardless of the terminology used to describe the
tax.
``(B) General exception.--The term `tax on Internet access'
does not include a tax levied upon or measured by net income,
capital stock, net worth, or property value.''.
(3) Section 1104(2)(B)(i) of the Internet Tax Freedom Act (47
U.S.C. 151 note) is amended by striking ``except with respect to a tax
(on Internet access) that was generally imposed and actually enforced
prior to October 1, 1998,''.
(c) Internet Access Service; Internet Access.--
(1) Internet access service.--Paragraph (3)(D) of section
1101(d) (as redesignated by subsection (b)(1) of this section) of
the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by
striking the second sentence and inserting ``The term `Internet
access service' does not include telecommunications services,
except to the extent such services are purchased, used, or sold by
a provider of Internet access to provide Internet access.''.
(2) Internet access.--Section 1104(5) of that Act is amended by
striking the second sentence and inserting ``The term `Internet
access' does not include telecommunications services, except to the
extent such services are purchased, used, or sold by a provider of
Internet access to provide Internet access.''.
SEC. 3. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS.
The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended--
(1) by redesignating section 1104 as section 1105; and
(2) by inserting after section 1103 the following:
``SEC. 1104. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS.
``(a) Pre-October 1998 Taxes.--
``(1) In general.--Section 1101(a) does not apply to a tax on
Internet access that was generally imposed and actually enforced
prior to October 1, 1998, if, before that date--
``(A) the tax was authorized by statute; and
``(B) either--
``(i) a provider of Internet access services had a
reasonable opportunity to know, by virtue of a rule or
other public proclamation made by the appropriate
administrative agency of the State or political subdivision
thereof, that such agency has interpreted and applied such
tax to Internet access services; or
``(ii) a State or political subdivision thereof generally
collected such tax on charges for Internet access.
``(2) Termination.--
``(A) In general.--Except as provided in subparagraph (B),
this subsection shall not apply after November 1, 2007.
``(B) State telecommunications service tax.--
``(i) Date for termination.--This subsection shall not
apply after November 1, 2006, with respect to a State
telecommunications service tax described in clause (ii).
``(ii) Description of tax.--A State telecommunications
service tax referred to in subclause (i) is a State tax--
``(I) enacted by State law on or after October 1,
1991, and imposing a tax on telecommunications service;
and
``(II) applied to Internet access through
administrative code or regulation issued on or after
December 1, 2002.''.
``(b) Pre-November 2003 Taxes.--
``(1) In general.--Section 1101(a) does not apply to a tax on
Internet access that was generally imposed and actually enforced as
of November 1, 2003, if, as of that date, the tax was authorized by
statute and--
``(A) a provider of Internet access services had a
reasonable opportunity to know by virtue of a public rule or
other public proclamation made by the appropriate
administrative agency of the State or political subdivision
thereof, that such agency has interpreted and applied such tax
to Internet access services; and
``(B) a State or political subdivision thereof generally
collected such tax on charges for Internet access.
``(2) Termination.--This subsection shall not apply after
November 1, 2005.''.
SEC. 4. ACCOUNTING RULE.
The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by
adding at the end the following:
``SEC. 1106. ACCOUNTING RULE.
``(a) In General.--If charges for Internet access are aggregated
with and not separately stated from charges for telecommunications
services or other charges that are subject to taxation, then the
charges for Internet access may be subject to taxation unless the
Internet access provider can reasonably identify the charges for
Internet access from its books and records kept in the regular course
of business.
``(b) Definitions.--In this section:
``(1) Charges for internet access.--The term `charges for
Internet access' means all charges for Internet access as defined
in section 1105(5).
``(2) Charges for telecommunications services.--The term
`charges for telecommunications services' means all charges for
telecommunications services, except to the extent such services are
purchased, used, or sold by a provider of Internet access to
provide Internet access.''.
SEC. 5. EFFECT ON OTHER LAWS.
The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by
section 4, is amended by adding at the end the following:
``SEC. 1107. EFFECT ON OTHER LAWS.
``(a) Universal Service.--Nothing in this Act shall prevent the
imposition or collection of any fees or charges used to preserve and
advance Federal universal service or similar State programs--
``(1) authorized by section 254 of the Communications Act of
1934 (47 U.S.C. 254); or
``(2) in effect on February 8, 1996.
``(b) 911 and E-911 Services.--Nothing in this Act shall prevent
the imposition or collection, on a service used for access to 911 or E-
911 services, of any fee or charge specifically designated or presented
as dedicated by a State or political subdivision thereof for the
support of 911 or E-911 services if no portion of the revenue derived
from such fee or charge is obligated or expended for any purpose other
than support of 911 or E-911 services.
``(c) Non-Tax Regulatory Proceedings.--Nothing in this Act shall be
construed to affect any Federal or State regulatory proceeding that is
not related to taxation.''.
SEC. 6. EXCEPTION FOR VOICE AND OTHER SERVICES OVER THE INTERNET.
The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by
section 5, is amended by adding at the end the following:
``SEC. 1108. EXCEPTION FOR VOICE SERVICES OVER THE INTERNET.
``Nothing in this Act shall be construed to affect the imposition
of tax on a charge for voice or similar service utilizing Internet
Protocol or any successor protocol. This section shall not apply to any
services that are incidental to Internet access, such as voice-capable
e-mail or instant messaging.''.
SEC. 6A. EXCEPTION FOR TEXAS MUNICIPAL ACCESS LINE FEE.
The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by
section 6, is amended by adding at the end the following:
``SEC. 1109. EXCEPTION FOR TEXAS MUNICIPAL ACCESS LINE FEE.
``Nothing in this Act shall prohibit Texas or a political
subdivision thereof from imposing or collecting the Texas municipal
access line fee pursuant to Texas Local Govt. Code Ann. ch. 283 (Vernon
2005) and the definition of access line as determined by the Public
Utility Commission of Texas in its `Order Adopting Amendments to
Section 26.465 As Approved At The February 13, 2003 Public Hearing',
issued March 5, 2003, in Project No. 26412.''.
SEC. 7. GAO STUDY OF EFFECTS OF INTERNET TAX MORATORIUM ON STATE AND
LOCAL GOVERNMENTS AND ON BROADBAND DEPLOYMENT.
The Comptroller General shall conduct a study of the impact of the
Internet tax moratorium, including its effects on the revenues of State
and local governments and on the deployment and adoption of broadband
technologies for Internet access throughout the United States,
including the impact of the Internet Tax Freedom Act (47 U.S.C. 151
note) on build-out of broadband technology resources in rural
underserved areas of the country. The study shall compare deployment
and adoption rates in States that tax broadband Internet access service
with States that do not tax such service, and take into account other
factors to determine whether the Internet Tax Freedom Act has had an
impact on the deployment or adoption of broadband Internet access
services. The Comptroller General shall report the findings,
conclusions, and any recommendations from the study to the Senate
Committee on Commerce, Science, and Transportation and the House of
Representatives Committee on Energy and Commerce no later than November
1, 2005.
SEC. 8. EFFECTIVE DATE.
The amendments made by this Act take effect on November 1, 2003.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.