[110th Congress Public Law 108]
[From the U.S. Government Printing Office]


[DOCID: f:publ108.110]

[[Page 1023]]

             INTERNET TAX FREEDOM ACT AMENDMENTS ACT OF 2007

[[Page 121 STAT. 1024]]

Public Law 110-108
110th Congress

                                 An Act


 
   To amend the Internet Tax Freedom Act to extend the moratorium on 
 certain taxes relating to the Internet and to electronic <<NOTE: Oct. 
                   31, 2007 -  [H.R. 3678]>> commerce.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Internet Tax Freedom Act 
Amendments Act of 2007. Communications and tele-communications. 47 USC 
609 note.>> 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 
        ``2014'', and
            (2) in section 1104(a)(2)(A) by striking ``2007'' and 
        inserting ``2014''.

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.-- <<NOTE: Effective date.>> 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) <<NOTE: Applicability.>> Exceptions.--Paragraph (1) 
        shall not apply until June 30, 2008, 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

[[Page 121 STAT. 1025]]

                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 June 30, 
        2008, 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;
                    ``(D) does not include voice, audio or video 
                programming, or other products and services (except 
                services described in subparagraph (A), (B), (C), or 
                (E)) 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), (C), or (E); and
                    ``(E) includes a homepage, electronic mail and 
                instant messaging (including voice- and video-capable 
                electronic mail and instant messaging), video clips, and 
                personal electronic storage capacity, that are provided 
                independently or not packaged with Internet access.'';
            (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.-- <<NOTE: Effective 
                      date.>> Effective November 1, 2007, the term `tax 
                      on Internet access' also does not include a State 
                      tax expressly levied on commercial activity,

[[Page 121 STAT. 1026]]

                      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. SUNSET OF GRANDFATHER PROVISIONS.

    Section 1104(a) of the Internet Tax Freedom Act <<NOTE: 47 USC 151 
note.>> is amended by adding at the end thereof the following:
            ``(3) Exception.--Paragraphs (1) and (2) shall not apply to 
        any State that has, more than 24 months prior to the date of 
        enactment of this paragraph, enacted legislation to repeal the 
        State's taxes on Internet access or issued a rule or other 
        proclamation made by the appropriate agency of the State that 
        such State agency has decided to no longer apply such tax to 
        Internet access.''.

[[Page 121 STAT. 1027]]

SEC. 7. <<NOTE: 47 USC 151 note.>> 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).

    Approved October 31, 2007.

LEGISLATIVE HISTORY--H.R. 3678 (S. 2128):
---------------------------------------------------------------------------

HOUSE REPORTS: No. 110-372 (Comm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 153 (2007):
            Oct. 16, considered and passed House.
            Oct. 25, considered and passed Senate, amended.
            Oct. 30, House concurred in Senate amendment.

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