Permanent Internet Access Tax Ban Clears Congress

Heads to President's desk for signature 2/11/2016 12:48:00 PM Eastern

The Senate Thursday (Feb. 11) passed the Permanent Internet Tax Freedom Act (PITFA), which would permanently bar states and localities from imposing taxes on Internet access. The bill has already passed the House, so now goes to the President's desk.

PITFA was included on a Trade Customs Enforcement bill that passed overwhelmingly Thursday by a vote of 75 to 20.

Paving the way for passage of the Internet tax ban was Senate Majority Leader Mitch McConnell's agreement to consider a version of Internet sales tax legislation in this session of Congress.

Sen. Dick Durbin (D-Ill.), who had spearheaded opposition to passing PITFA without also considering and voting on the Marketplace Fairness Act (MFA), said before the vote that while he still opposed the customs bill he was not blocking PITFA given those assurance from McConnell that MFA would get a vote this session.

Durbin was among those legislators whose states will lose money when PITFA sunsets their grandfathered Internet access taxes. They wanted to combine it with MFA, which would allow states to collect taxes from online purchases.

They had succeeded in blocking a vote on the customs bill and PITFA in December, seeking assurances about action on a stand-alone MFA.

Illinois is one of seven states that currently collect taxes on Internet access because they were grandfathered when a temporary ITFA passed in 1998. PITFA would sunset those taxes by 2020, which Durbin has said would then cost his state $390 million in taxes.

He said that it was not fair to eliminate those taxes without offsetting them by requiring online retailers to collect taxes from buyers, who he pointed out have to provide a zip code that makes it relatively easy to identify what taxes should be collected.

A temporary renewal of the ITFA—which has been regularly renewed since it passed in 1998 as a temporary ban—had been extended regularly through the end of September 2016.

Republicans strongly back ITFA, but not so much the MFA, so a vote in this session does not mean passage this session.

“Reliable and affordable Internet access is essential for Missourians who rely on the web for everything from education to banking to staying connected to friends and family,” said Senator Roy Blunt (R-Mo.), who co-sponsored PITFA. “The Internet is also a major driver of economic growth and job creation, and I’m glad the Senate acted today to help sustain that growth and protect families by permanently keeping Internet access tax-free."

"With today’s vote, American consumers will never again face the threat of new onerous taxes on their broadband bill," said USTelecom President Walter McCormick. "The bipartisan legislation, when signed into law, will protect millions of Americans from discriminatory taxes on Internet access and encourage further innovation, investment, and increased broadband adoption. We commend Senators Thune, Wyden, Hatch and Majority Leader McConnell for their leadership on this bill making the tax ban permanent, avoiding the need for periodic renewals."

On a related note, the House Communications Subcommittee passed a bill Thursday that would prevent the FCC from regulating the rates charged broadband customers for Internet access.

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