Internet Tax Freedom Act

The 1998 Internet Tax Freedom Act is a United States law authored by Representative Christopher Cox and Senator Ron Wyden, and signed into law as title XI of Pub.L. 105–277 on October 21, 1998 by President Bill Clinton in an effort to promote and preserve the commercial, educational, and informational potential of the Internet. The law bars federal, state and local governments from taxing Internet access and from imposing discriminatory Internet-only taxes such as bit taxes, bandwidth taxes, and email taxes. It also bars multiple taxes on electronic commerce.

It does not exempt sales made on the Internet from taxation, as these may be taxed at the same state and local sales tax rate as non-Internet sales, just like mail order sales. The Act did not repeal any state sales or use tax.

The 1998 law also authorized establishment of a study commission to study national tax policy with regard to the Internet. The Advisory Commission on Electronic Commerce studied the issue from 1999 to 2000. The Commission was chaired by then-Virginia Governor James S. Gilmore, III, who led a majority coalition on the Commission to issue a final report opposing taxation of the Internet and eliminating the federal excise tax on telecommunications services, among other ideas.

The law was originally enacted as a ten-year moratorium. It was then extended multiple times by the United States Congress, including several short-term extensions in 2014 and 2015: President Barack Obama signed one extension on September 19, 2014, until December 11, 2014; another one on December 16, 2014, in the Consolidated and Further Continuing Appropriations Act of 2015, until October 1, 2015; and yet another extension on September 30, 2015, in the Continuing Appropriations Act of 2016, which extended the Internet Tax Freedom Act through December 11, 2015.

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