[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3678 Engrossed in House (EH)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
110th CONGRESS
  1st Session
                                H. R. 3678

_______________________________________________________________________

                                 AN ACT


 
   To amend the Internet Tax Freedom Act to extend the moratorium on 
   certain taxes relating to the Internet and to electronic commerce.

    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 Freedom Act Amendments 
Act of 2007''.

SEC. 2. MORATORIUM.

    The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended--
            (1) in section 1101(a) by striking ``2007'' and inserting 
        ``2011'', and
            (2) in section 1104(a)(2)(A) by striking ``2007'' and 
        inserting ``2011''.

SEC. 3. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS.

    Section 1104 of the Internet Tax Freedom Act (47 U.S.C. 151 note) 
is amended by adding at the end the following:
    ``(c) Application of Definition.--
            ``(1) In general.--Effective as of November 1, 2003--
                    ``(A) for purposes of subsection (a), the term 
                `Internet access' shall have the meaning given such 
                term by section 1104(5) of this Act, as enacted on 
                October 21, 1998; and
                    ``(B) for purposes of subsection (b), the term 
                `Internet access' shall have the meaning given such 
                term by section 1104(5) of this Act as enacted on 
                October 21, 1998, and amended by section 2(c) of the 
                Internet Tax Nondiscrimination Act (Public Law 108-
                435).
            ``(2) Exceptions.--Paragraph (1) shall not apply until 
        November 1, 2007, to a tax on Internet access that is--
                    ``(A) generally imposed and actually enforced on 
                telecommunications service purchased, used, or sold by 
                a provider of Internet access, but only if the 
                appropriate administrative agency of a State or 
                political subdivision thereof issued a public ruling 
                prior to July 1, 2007, that applied such tax to such 
                service in a manner that is inconsistent with paragraph 
                (1); or
                    ``(B) the subject of litigation instituted in a 
                judicial court of competent jurisdiction prior to July 
                1, 2007, in which a State or political subdivision is 
                seeking to enforce, in a manner that is inconsistent 
                with paragraph (1), such tax on telecommunications 
                service purchased, used, or sold by a provider of 
                Internet access.
            ``(3) No inference.--No inference of legislative 
        construction shall be drawn from this subsection or the 
        amendments to section 1105(5) made by the Internet Tax Freedom 
        Act Amendments Act of 2007 for any period prior to November 1, 
        2007, with respect to any tax subject to the exceptions 
        described in subparagraphs (A) and (B) of paragraph (2).''.

SEC. 4. DEFINITIONS.

    Section 1105 of the Internet Tax Freedom Act (47 U.S.C. 151 note) 
is amended--
            (1) in paragraph (1) by striking ``services'',
            (2) by amending paragraph (5) to read as follows:
            ``(5) Internet access.--The term `Internet access'--
                    ``(A) means a service that enables users to connect 
                to the Internet to access content, information, or 
                other services offered over the Internet;
                    ``(B) includes the purchase, use or sale of 
                telecommunications by a provider of a service described 
                in subparagraph (A) to the extent such 
                telecommunications are purchased, used or sold--
                            ``(i) to provide such service; or
                            ``(ii) to otherwise enable users to access 
                        content, information or other services offered 
                        over the Internet;
                    ``(C) includes services that are incidental to the 
                provision of the service described in subparagraph (A) 
                when furnished to users as part of such service, such 
                as a home page, electronic mail and instant messaging 
                (including voice- and video-capable electronic mail and 
                instant messaging), video clips, and personal 
                electronic storage capacity; and
                    ``(D) does not include voice, audio or video 
                programming, or other products and services (except 
                services described in subparagraph (A), (B), or (C)) 
                that utilize Internet protocol or any successor 
                protocol and for which there is a charge, regardless of 
                whether such charge is separately stated or aggregated 
                with the charge for services described in subparagraph 
                (A), (B), or (C).'',
            (3) by amending paragraph (9) to read as follows:
            ``(9) Telecommunications.--The term `telecommunications' 
        means `telecommunications' as such term is defined in section 
        3(43) of the Communications Act of 1934 (47 U.S.C. 153(43)) and 
        `telecommunications service' as such term is defined in section 
        3(46) of such Act (47 U.S.C. 153(46)), and includes 
        communications services (as defined in section 4251 of the 
        Internal Revenue Code of 1986 (26 U.S.C. 4251)).'', and
            (4) in paragraph (10) by adding at the end the following:
                    ``(C) Specific exception.--
                            ``(i) Specified taxes.--Effective November 
                        1, 2007, the term `tax on Internet access' also 
                        does not include a State tax expressly levied 
                        on commercial activity, modified gross 
                        receipts, taxable margin, or gross income of 
                        the business, by a State law specifically using 
                        one of the foregoing terms, that--
                                    ``(I) was enacted after June 20, 
                                2005, and before November 1, 2007 (or, 
                                in the case of a State business and 
                                occupation tax, was enacted after 
                                January 1, 1932, and before January 1, 
                                1936);
                                    ``(II) replaced, in whole or in 
                                part, a modified value-added tax or a 
                                tax levied upon or measured by net 
                                income, capital stock, or net worth 
                                (or, is a State business and occupation 
                                tax that was enacted after January 1, 
                                1932 and before January 1, 1936);
                                    ``(III) is imposed on a broad range 
                                of business activity; and
                                    ``(IV) is not discriminatory in its 
                                application to providers of 
                                communication services, Internet 
                                access, or telecommunications.
                            ``(ii) Modifications.--Nothing in this 
                        subparagraph shall be construed as a limitation 
                        on a State's ability to make modifications to a 
                        tax covered by clause (i) of this subparagraph 
                        after November 1, 2007, as long as the 
                        modifications do not substantially narrow the 
                        range of business activities on which the tax 
                        is imposed or otherwise disqualify the tax 
                        under clause (i).
                            ``(iii) No inference.--No inference of 
                        legislative construction shall be drawn from 
                        this subparagraph regarding the application of 
                        subparagraph (A) or (B) to any tax described in 
                        clause (i) for periods prior to November 1, 
                        2007.''.

SEC. 5. CONFORMING AMENDMENTS.

    (a) Accounting Rule.--Section 1106 of the Internet Tax Freedom Act 
(47 U.S.C. 151 note) is amended--
            (1) by striking ``telecommunications services'' each place 
        it appears and inserting ``telecommunications'', and
            (2) in subsection (b)(2)--
                    (A) in the heading by striking ``services'',
                    (B) by striking ``such services'' and inserting 
                ``such telecommunications'', and
                    (C) by inserting before the period at the end the 
                following: ``or to otherwise enable users to access 
                content, information or other services offered over the 
                Internet''.
    (b) Voice Services.--The Internet Tax Freedom Act (47 U.S.C. 151 
note) is amended by striking section 1108.

SEC. 6. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect on 
November 1, 2007, and shall apply with respect to taxes in effect as of 
such date or thereafter enacted, except as provided in section 1104 of 
the Internet Tax Freedom Act (47 U.S.C. 151 note).

            Passed the House of Representatives October 16, 2007.

            Attest:

                                                                 Clerk.
110th CONGRESS

  1st Session

                               H. R. 3678

_______________________________________________________________________

                                 AN ACT

   To amend the Internet Tax Freedom Act to extend the moratorium on 
   certain taxes relating to the Internet and to electronic commerce.