Washington, DC -- U.S. Senators Ron Wyden (D-Ore.) and Conrad Burns (R-Mont.) today joined Representative Christopher Cox (R-Calif.) to announce increasing support for their legislation to indefinitely extend the existing moratorium on new and discriminatory Internet taxes. The current moratorium on unfair Internet taxes – including taxes on Internet access, multiple-state taxation of a single item bought online, and discriminatory taxes that treat Internet purchases differently than other types of sales – is set to expire in November of this year. A growing number of businesses and organizations nationwide are backing the effort to make the ban permanent. Wyden and Burns, along with Senators Patrick Leahy (D-Vt.) and Dianne Feinstein (D-Calif.), have introduced the Internet Tax Non-Discrimination Act (S. 52) to make the ban permanent.

“This moratorium makes sure e-tailers have an equal shot at success in today’s economy, and I believe they should be protected once and for all from unfair taxes that threaten their survival,” said Wyden. “States have never proven they’ve been injured by their inability to discriminate against online sellers, and e-commerce has grown exponentially under the protection of the Cox-Wyden law. It’s time to make this ban permanent.”

“With the current state of the economy, it's important we instate and uphold commonsense tax laws that are fair to businesses,” said Burns. “I know how hard it is to stay above water right now, and it's unreasonable to burden businesses and organizations with taxes that drag them under. This moratorium puts e-businesses on a much more level playing field, and I believe it is time to make it permanent.”

“Electronic commerce is beginning to blossom, but it is still in its infancy,” Leahy said. “Stability is a key to Internet commerce reaching its full potential, and creating new tax categories for the Internet is exactly the wrong thing to do. Internet commerce should not be subject to discriminatory new taxes that do not apply to other commerce. In fact, without the current moratorium, 30,000 different jurisdictions around the country could levy discriminatory or multiple Internet taxes on e-commerce. We need to continue the moratorium to provide the stability necessary for electronic commerce to flourish.”

“Since its widespread adoption less than a decade ago, the Internet has had a profound impact on the way America conducts business, and drove the astonishing increase in our economy’s productivity during the 1990’s,” Feinstein said. “This legislation will ensure that Americans can continue to access the internet tax-free and will not have to pay any taxes directed specifically at e-commerce. By extending the Internet Tax Freedom Act permanently we can ensure the continued growth of e-commerce and the spread of the internet into every American household.”

In the House, Rep. Cox has been joined by 100 cosponsors to date. Businesses and organizations supporting the House and Senate bills include:

• E-Bay
• The Direct Marketing Association (DMA)
• Federated Department Stores, Inc.
• Software & Information Industry Association (SIIA)
• U.S. Internet Industry Association (USIIA)
• Software Finance and Tax Executives Council (SOFTEC)
• Information Technology Association of America (ITAA)
• American Electronics Association (AeA)

In 1992, the U.S. Supreme Court reaffirmed a previous ruling that the nation’s 7,600 tax jurisdictions could not impose sales tax collection burdens on out-of-state sellers if the seller has no “nexus,” or physical presence, in the taxing jurisdiction. Since enactment of
ITFA, which applies the Supreme Court rulings to Internet sales, online consumers have been threatened by a growing number of tax schemes proposed for implementation as soon as the ban expired. Those schemes range from an arbitrary hodge-podge of state and local sales and use taxes to the creation of a new “unified” Federal sales tax. Extending the ITFA ban indefinitely will protect consumers by making sure online sellers are to be treated equally with other businesses.

S. 52 is being considered by the Senate Commerce Committee.

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