[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 150 Engrossed in Senate (ES)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
108th CONGRESS
  2d Session
                                 S. 150

_______________________________________________________________________

                                 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, the 
        tax was authorized by statute and either--
                  ``(A) 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
                  ``(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, 2007.
    ``(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. 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 under 
served 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.

            Passed the Senate Apri 29, 2004.

            Attest:

                                                             Secretary.
108th CONGRESS

  2d Session

                                 S. 150

_______________________________________________________________________

                                 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.