Internet access tax ban is enacted, part of trade legislation

Internet access tax ban is enacted

President Obama on February 24, 2016, signed into law H.R. 644, the “Trade Facilitation and Trade Enforcement Act of 2015,” which generally concerns trade and customs items. The legislation also includes a provision that makes permanent the ban on states and localities taxing internet access or placing multiple and discriminatory taxes on electronic commerce. The new law allows “grandfathered” states and localities to continue their existing taxes on internet access through June 2020.

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The measures in the legislation are paid for by expanded customs user fees and increased penalties for a failure to file a tax return. Read text of the legislation

Background

First enacted in 1998 on a temporary basis, the general ban on states and localities taxing internet access or placing multiple and discriminatory taxes on electronic commerce has been extended numerous times.  States and localities that had imposed and enforced taxes on internet access prior to October 1, 1998, generally can continue to do so under “grandfather provisions through June 2020." 

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