US to Maintain Ban on Sales Taxes for Internet Access Until 2007

On April 29, 2004, the US Congress renewed an amended form of the Internet Tax Freedom Act (47 USC 151), now called the Internet Tax Nondiscrimation Act (108th 2d S 150 ES). The legislation extends application of the tax-exempt status of Internet access until November 1, 2007. The new text narrows the definition of Internet access, by excluding "telecommunications services, except to the extent such services are purchased, used, or sold by a provider of Internet access to provide Internet access." The amendments also further restrict the tax prohibition by excluding "non-access" related Internet services from the prohibition, such as VOIP. New Section 1108 reads: "Nothing in this Act shall be construed to affect the imposition of tax on a charge for voice or similar service utilizing Internet Protocol or any successor protocol. This section shall not apply to any services that are incidental to Internet access, such as voice-capable e-mail or instant messaging." For the complete text of the Internet Tax Nondiscrimation Act, see: http://thomas.loc.gov/, search for s 150, and click on the ES (passed by Senate) version. For the complete text of the underlying Internet Tax Freedom Act, visit: http://uscode.house.gov/usc.htm and search under Title 47, Section 151. For news commentary on the legislation, see: http://news.com.com/2100-1028_3-5202140.html; http://www.nytimes.com/2004/04/30/politics/30INTE.html; or http://online.wsj.com/article/0,,SB108326145125697450,00.html. Summary by: Nicholas Whalen