The NASE encourages the development of e-commerce by keeping the Internet and telecommunications as tax-free as possible. Taxing the Internet and goods sold over the Internet will add to the imbalance small businesses face on an already unequal playing field.

Background:
The advent of the Internet has changed the face of business drastically. To be successful in business, owners must now become Web proficient and utilize the Internet to market and sell their products and services. With our society moving more and more towards using the Internet to purchase products, all levels of government have realized the tremendous revenue potentials of taxing those purchases.

The alarming rate in which the Internet was being utilized by individuals and businesses forced Congress to take notice. In 1998, the 105th Congress passed legislation that imposed a three-year moratorium on Internet access and commerce taxes as well as established a commission to research Internet taxation. In April 2000, the 19-member commission released its findings without a definitive recommendation on Internet taxation.

Legislative Activity:
In the 108th Congress, the Internet Tax Non-discrimination Act of 2003 (S.150), introduced by Senator George Allen (R-Va.), became law. The law extends until November 1, 2007, the prohibition on taxing Internet access and multiple taxes on Internet transactions.

The NASE will continue to monitor this issue in future legislative sessions.

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