The U.S. House of Representatives is expected to approve and send to the Senate next week a bill extending the moratorium on taxing Internet sales for two years.
The Senate, which is considering similar legislation, will have to act swiftly if the three-year-old moratorium is to be extended beyond Oct. 21 when it is set to expire.
Wednesday the House Judiciary Committee set the stage for the House and Senate action when it approved a watered down version of Rep. Christopher Cox’s Internet Tax Freedom Act (HR-1552) in a unanimous voice-vote.
Originally the bill, calling for a permanent ban on Internet access taxes, would have extended the moratorium by five years, to Dec. 21, 2006.
A move by several members to insert language into the bill that would make it easier for states to collect taxes on Internet sales sparked a lengthy debate, which Committee Chairman Rep. James Sensenbrenner (R-WI) ended by ruling that it was “not relevant to the issue at hand.”
The issue is expected to arise in the Senate where a bill sponsored by Sen. Byron Dorgan (D-ND) would not only extend the moratorium to Jan. 1, 2006, but would authorize states to tax remote sales, whether by mail, telephone, over the Internet or any other direct response vehicle.
Dorgan would not say if he would press the issue when and if the Cox’s bill reaches the Senate.
Meantime, Cox, promising the full House would “act expeditiously to pass this legislation,” released a statement shortly after the House committee vote saying that “the will of the Congress is evident [because] there is unanimous bipartisan agreement that the Internet should not be singled out for discriminatory tax treatment.”
He added that continuing the moratorium means that more than 10,000 state and local agencies with taxing authority over the Internet “will continue to be barred not only from taxing Internet access, but also from subjecting buyers and sellers of electronic commerce to taxation in multiple states, or discriminating against Internet commerce with taxes that don’t apply off-line.”
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