Should Auld e-Commerce Be Forgot?

Not surprisingly, the law on Internet taxation remains unsettled ' just as it has been every time we have written about it. In late 2007, Congress once again (as it has done several times) put off a decision on making the Internet Tax Freedom Act permanent. That law prevents state and local governments from taxing Internet access services (in the same way they add charges to your phone bills ' see, www.informationweek.com/showArticle.jhtml?articleID=202801131).

After unanimous approval in Congress, the President quickly signed The Internet Tax Freedom Amendments Act of 2007 on Oct. 31. While the ban did not become permanent, as backers had hoped, this time it was extended for seven years, until 2014 (much longer than the brief extensions passed in 2001 and 2004). (The extension also clarified how related services may be taxed, and began a phase-out of certain provisions that allowed 'grandfathered' pre-existing taxes to survive.) The importance of this extension to consumers and businesses, in an economy that has come to depend on Internet access, can be seen in the efforts abroad to tax online services, as has occurred in France, for example (see, www.dailytech.com/French+President+Proposes+Internet+Tax/article10306.htm). The Internet is such an inviting target to revenue-strapped local taxing authorities ' especially since taxpayers may not be local voters ' that federal protection clearly remains a necessity.