The Internet tax moratorium expired Sunday and the Senate may not be in any rush to take up the issue.
The House of Representatives voted last Tuesday to extend the ban for two years, but the issue was not taken up by the Senate before its expiration. This paves the way for more than 7,500 state and local governmental entities to tax Internet access fees.
But even though there is a technical lapse in the ban it doesn't have a practical effect because state legislatures are not yet prepared to enact new laws, said Barry Piatt, spokesman for Sen. Byron Dorgan (D-ND) who has a Senate bill pending on extending the Internet tax moratorium.
Piatt predicted that the issue would probably be taken up again some time before January, when most state legislatures start their new sessions.
Part of the delay in the Senate's action on the bill may have been caused by the anthrax scare, which closed both the House and Senate office buildings for several days within the past week. The Direct Marketing Association had hoped the Senate would take action on the law before it expired.
"We're really disappointed at this," said DMA spokesperson Louis Mastria said. He argued that the Senate could have easily adopted similar language to the House bill that passed last Tuesday and a bill would have been nearly ready for both the House and Senate to begin hammering out a compromise bill.
Others were more optimistic, predicting that the issue could be taken up as early as later this week.
"The Senator (Wyden) says a short lapse in the moratorium won't be the end of the world' but he would not like to see the issue dragged out for much longer," said Lisa Raasch, a spokeswoman for moratorium advocate Sen. Ron Wyden (D-OR).
The moratorium on Internet taxes was enacted in 1998 to provide the then-budding Internet industry a cooling-off period that prohibited state and local authorities from levying taxes on it.
Questions over taxing Internet commerce stem from a 1992 Supreme Court decision. The Court ruled that a state couldn't force out-of-state businesses to collect sales taxes unless the businesses have a physical presence within the state.
