HR 4267 IH

To amend the Internet Tax Freedom Act to impose a permanent moratorium on State and local taxes on Internet access; to extend for 5 years the duration of the moratorium applicable to multiple and discriminatory taxes on the electronic commerce; to impose a 5-year moratorium on sales of digitized goods and products (and their counterparts); to encourage States to adopt a Uniform Sales and Use Tax, and for other purposes.

April 13, 2000

Mr. HYDE (for himself, Mr. CONYERS, Mr. GEKAS, and Mr. NADLER) introduced the following bill; which was referred to the Committee on the Judiciary

To amend the Internet Tax Freedom Act to impose a permanent moratorium on State and local taxes on Internet access; to extend for 5 years the duration of the moratorium applicable to multiple and discriminatory taxes on the electronic commerce; to impose a 5-year moratorium on sales of digitized goods and products (and their counterparts); to encourage States to adopt a Uniform Sales and Use Tax, and for other purposes.

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 Reform and Reduction Act of 2000'.

SEC. 2. MORATORIUM AMENDMENT TO THE INTERNET TAX FREEDOM ACT.

(a) MORATORIUM AMENDMENT- Section 1101(a) of title XI of division C of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is amended to read as follows:

`(a) MORATORIA ON STATE AND LOCAL TAXES ON THE INTERNET- No State or political subdivision thereof shall impose any of the following taxes:

`(1) Taxes on Internet access.

`(2) During the period beginning on October 1, 1998, and ending on October 21, 2006, multiple or discriminatory taxes on electronic commerce.

`(3) During the period beginning on the date of the enactment of the Internet Tax Reform and Reduction Act of 2000 and ending on October 21, 2006, taxes on sales of digitized goods and products (and their counterparts).'.

(b) TECHNICAL AMENDMENTS- Section 1101 of title XI of division C of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is amended--

(1) by striking subsection (b); and

(2) by redesignating subsections (c) through (h) as subsections (b) through (g), respectively.

(c) LIABILITIES AND PENDING CASES- Nothing in the amendments made by this section affects--

(1) liability for taxes accrued and enforced before the date of enactment of this Act; or

(2) ongoing litigation relating to such taxes.

SEC. 3. OTHER AMENDMENTS TO THE TAX FREEDOM ACT.

Title XI of division C of Public Law 105-277 (112 Stat. 2681-719; 47 U.S.C. 151 note) is amended--

(1) by redesignating section 1104 as section 1107; and

(2) by inserting after section 1103 the following:

`SEC. 1104. DETERMINATION OF JURISDICTIONAL NEXUS.

`(a) COLLECTING TAXES- The following factors shall not be sufficient, separately or collectively, to empower a State to impose on a seller that is not physically present in such State an obligation to collect a tax payable to such State by a purchaser that is physically present in such State:

`(1) The use by such seller of an Internet service provider that is physically present in such State.

`(2) The placement of digital data by such seller on a server located in such State.

`(3) The use of telecommunications service provided to such seller by a telecommunications provider that is physically present in such State.

`(4) The use or presence in such State of intangible property owned by such seller.

`(5) The presence in such State of persons that purchase from such seller.

`(6) The affiliation of such seller with a person that is physically present in such State and that pays any tax imposed by such State or by a political subdivision of such State.

`(7) The performance of repair or warranty services in such State by or on behalf of such seller with respect to property sold by such seller if such seller is not physically present in such State except to perform such services.

`(8) The existence of a contract between such seller and a person that is physically present in such State to the extent that such contract provides for the return to such person of goods purchased from such seller by means of the Internet or of a nonelectronic catalog.

`(9) The advertisement of the business location, telephone number, or Internet address of such seller.

`(b) PAYMENT OF INCOME TAXES- The following factors shall not be sufficient, separately or collectively, to empower a State to require a seller to meet the business activity and income tax reporting and payment obligations of such State:

`(1) Any of the factors specified in paragraphs (1) through (9) of subsection (a).

`(2) The registration relating to sales or use taxes in effect in such State, by such seller with such State.

`(3) The collection or remittance of use taxes by such seller to such State.

`SEC. 1105. DEVELOPMENT OF UNIFORM SALES AND USE TAX ACT.

`It is the sense of the Congress that, not later than October 21, 2004, States and political subdivisions of States should work cooperatively with the National Conference of Commissioners on Uniform State Laws (in this section referred to as the `Conference') to develop and draft a Uniform Sales and Use Tax Act that--

`(1) reflects a simplified synthesis of the sales and use tax policies of States and political subdivisions of States, applicable to sellers described in paragraph (2);

END