Legislation reinstating the government’s moratorium in new Internet taxes, which expired on Oct. 21, has been introduced in the Senate by Sen. Mike Enzi (R-WY).
The Senate Commerce Committee is reviewing Enzi’s bill. At press time. its chairman, Sen. Fritz Hollings (D-SC) has not scheduled f any hearings on it.
The three-year-old moratorium expired after the Senate, on Oct. 19, failed to act on a similar measure, sponsored by Rep. Christopher Cox (R-CA), which the House passed earlier and a last-minute move by Sen. Byron Dorgan (D-ND) to extend the moratorium to next June 30.
Despite new language in this bill, Jerry Cerasale, Direct Marketing Association senior vice president, does not think it goes far enough. “They should ban all Internet taxes,” he said.
Besides prohibiting state and local governments from imposing new taxes on Internet sales and transactions, Enzi’s Internet Moratorium and Equity Act (S-1567) includes a permanent ban on Internet access taxes.
At the same time he bill “encourages” states, which have been fighting for years to tax remote sales — s sales made by mail, over the telephone, the Internet or other direct response methods — to develop a streamlined system of sales and use taxes.
Although 32 states are participating in an ambitious plan called the Streamlined Sales Tax Project to simplify their tax codes and reach a consensus on what is taxable and what is not, only a few have passed legislation agreeing to simplify their tax systems and officially participate in the project.
At least 20 states would have to officially agree to participate in the program before Congress would consider legislation authorizing the states to sale by out-of-state vendors who do not have a physical presence within their borders.
The U.S. Supreme Court, in a 1992 ruling, said the Commerce Clause of the Constitution prohibited states from taxing the sales of remote vendors without specific authorization from Congress.
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