Washington Report

Keeping Members Informed About Regulatory Issues

Contents
May 2000

CATALOG ISSUES UPDATE

INTERNET TAX MORATORIUM PASSES HOUSE, ON HOLD IN SENATE

In response to the report of the Advisory Commission on Electronic Commerce (reported in the April Washington Report), the leadership of the House of Representatives decided to pursue a three-pronged strategy on Internet regulation and taxes. They supported three pieces of legislation: (1) a 5-year extension on the current moratorium on access taxes and multiple and discriminatory taxes on the Internet; (2) repeal of the 3% federal excise tax on telecommunications; and (3) a prohibition on the Federal Communications Commission and other government agencies from assessing fees on companies prodding Internet access. All three bills have passed the House by wide margins and are currently pending in the Senate.

The DMA was very involved in efforts to pass the five-year extension of the current moratorium (H.R. 3709, the Internet Nondiscrimination Act). The bill passed the House by a vote of 372-75 on May 10, 2000, and is currently being held at the desk (not referred to a Committee) in the Senate. The Majority Leader, Trent Lott, can move to have the bill considered at any time. He will not do this until he is sure that he has 60 votes to break a filibuster. Even if he has the 60 votes (we are working very hard on mustering the votes now), he may be reluctant to debate the motion and the bill. The motion to consider is fully debatable, and the bill is subject to amendments. Proponents of taxation will tie the moratorium extension to sales and use tax collection by remote sellers. They will promise simplification and may well influence Senators who think collection issues should not be put off any longer.

The House avoided the problem of tying the moratorium to sales and use tax collection by remote sellers by promising a series of hearings on expanding the duty of remote sellers to collect. The first hearing was held by the House Judiciary Subcommittee on Commercial and Administrative Law on May 17, 2000. Five of the commissioners from the ACEC were the only witnesses. All points of view were represented and debated vigorously. Additional hearings are planned, but they have not yet been scheduled. In addition, the Senate Finance Committee is planning to hold a hearing on these issues sometime in July.

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