Text: S.150 — 108th Congress (2003-2004)All Information (Except Text)

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Public Law No: 108-435 (12/03/2004)

 
[108th Congress Public Law 435]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ435.108]


[[Page 118 STAT. 2615]]

Public Law 108-435
108th Congress

                                 An Act


 
    To make permanent the moratorium on taxes on Internet access and 
multiple and discriminatory taxes on electronic commerce imposed by the 
      Internet Tax Freedom Act. <<NOTE: Dec. 3, 2004 -  [S. 150]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Internet Tax 
Nondiscrimi- nation Act.>> 

SECTION 1. SHORT TITLE. <<NOTE: 47 USC 609 note.>> 

    This Act may be cited as the ``Internet Tax Nondiscrimination Act''.
SEC. 2. FOUR-YEAR EXTENSION OF INTERNET TAX MORATORIUM.

    (a) In General.--Subsection (a) of section 1101 of the Internet Tax 
Freedom Act (47 U.S.C. 151 note) is amended to read as follows:
    ``(a) Moratorium.--No State or political subdivision thereof may 
impose any of the following taxes during the period beginning November 
1, 2003, and ending November 1, 2007:
            ``(1) Taxes on Internet access.
            ``(2) Multiple or discriminatory taxes on electronic 
        commerce.''.

    (b) Conforming Amendments.--(1) Section 1101 of the Internet Tax 
Freedom Act (47 U.S.C. 151 note) is amended by striking subsection (d) 
and redesignating subsections (e) and (f) as subsections (d) and (e), 
respectively.
    (2) Section 1104(10) of the Internet Tax Freedom Act (47 U.S.C. 151 
note) is amended to read as follows:
            ``(10) Tax on internet access.--
                    ``(A) In general.--The term `tax on Internet access' 
                means a tax on Internet access, regardless of whether 
                such tax is imposed on a provider of Internet access or 
                a buyer of Internet access and regardless of the 
                terminology used to describe the tax.
                    ``(B) General exception.--The term `tax on Internet 
                access' does not include a tax levied upon or measured 
                by net income, capital stock, net worth, or property 
                value.''.

    (3) Section 1104(2)(B)(i) of the Internet Tax Freedom Act (47 U.S.C. 
151 note) is amended by striking ``except with respect to a tax (on 
Internet access) that was generally imposed and actually enforced prior 
to October 1, 1998,''.
    (c) Internet Access Service; Internet Access.--
            (1) Internet access service.--Paragraph (3)(D) of section 
        1101(d) (as redesignated by subsection (b)(1) of this section) 
        of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended 
        by striking the second sentence and inserting ``The

[[Page 118 STAT. 2616]]

        term `Internet access service' does not include 
        telecommunications services, except to the extent such services 
        are purchased, used, or sold by a provider of Internet access to 
        provide Internet access.''.
            (2) Internet access.--Section 1104(5) <<NOTE: 47 USC 151 
        note.>> of that Act is amended by striking the second sentence 
        and inserting ``The term `Internet access' does not include 
        telecommunications services, except to the extent such services 
        are purchased, used, or sold by a provider of Internet access to 
        provide Internet access.''.
SEC. 3. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS.

    The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended--
            (1) by redesignating section 1104 as section 
        1105; <<NOTE: 47 USC 151 note.>>  and
            (2) by inserting after section 1103 the following:

``SEC. 1104. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS.

    ``(a) Pre-October 1998 Taxes.--
            ``(1) In general.--Section 1101(a) does not apply to a tax 
        on Internet access that was generally imposed and actually 
        enforced prior to October 1, 1998, if, before that date--
                    ``(A) the tax was authorized by statute; and
                    ``(B) either--
                        ``(i) a provider of Internet access services had 
                      a reasonable opportunity to know, by virtue of a 
                      rule or other public proclamation made by the 
                      appropriate administrative agency of the State or 
                      political subdivision thereof, that such agency 
                      has interpreted and applied such tax to Internet 
                      access services; or
                        ``(ii) a State or political subdivision thereof 
                      generally collected such tax on charges for 
                      Internet access.
            ``(2) Termination.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), this subsection shall not apply after 
                November 1, 2007.
                    ``(B) State telecommunications service tax.--
                          ``(i) Date for termination.--This subsection 
                      shall not apply after November 1, 2006, with 
                      respect to a State telecommunications service tax 
                      described in clause (ii).
                          ``(ii) Description of tax.--A State 
                      telecommunications service tax referred to in 
                      subclause (i) is a State tax--
                                    ``(I) enacted by State law on or 
                                after October 1, 1991, and imposing a 
                                tax on telecommunications service; and
                                    ``(II) applied to Internet access 
                                through administrative code or 
                                regulation issued on or after December 
                                1, 2002.''.

    ``(b) Pre-November 2003 Taxes.--
            ``(1) In general.--Section 1101(a) does not apply to a tax 
        on Internet access that was generally imposed and actually 
        enforced as of November 1, 2003, if, as of that date, the tax 
        was authorized by statute and--
                    ``(A) a provider of Internet access services had a 
                reasonable opportunity to know by virtue of a public 
                rule or other public proclamation made by the 
                appropriate

[[Page 118 STAT. 2617]]

                administrative agency of the State or political 
                subdivision thereof, that such agency has interpreted 
                and applied such tax to Internet access services; and
                    ``(B) a State or political subdivision thereof 
                generally collected such tax on charges for Internet 
                access.
            ``(2) Termination.--This subsection shall not apply after 
        November 1, 2005.''.

SEC. 4. ACCOUNTING RULE.

    The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by 
adding at the end the following:

``SEC. 1106. ACCOUNTING RULE.

    ``(a) In General.--If charges for Internet access are aggregated 
with and not separately stated from charges for telecommunications 
services or other charges that are subject to taxation, then the charges 
for Internet access may be subject to taxation unless the Internet 
access provider can reasonably identify the charges for Internet access 
from its books and records kept in the regular course of business.
    ``(b) Definitions.--In this section:
            ``(1) Charges for internet access.--The term `charges for 
        Internet access' means all charges for Internet access as 
        defined in section 1105(5).
            ``(2) Charges for telecommunications services.--The term 
        `charges for telecommunications services' means all charges for 
        telecommunications services, except to the extent such services 
        are purchased, used, or sold by a provider of Internet access to 
        provide Internet access.''.

SEC. 5. EFFECT ON OTHER LAWS.

    The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by 
section 4, is amended by adding at the end the following:

``SEC. 1107. EFFECT ON OTHER LAWS.

    ``(a) Universal Service.--Nothing in this Act shall prevent the 
imposition or collection of any fees or charges used to preserve and 
advance Federal universal service or similar State programs--
            ``(1) authorized by section 254 of the Communications Act of 
        1934 (47 U.S.C. 254); or
            ``(2) in effect on February 8, 1996.

    ``(b) 911 and E-911 Services.--Nothing in this Act shall prevent the 
imposition or collection, on a service used for access to 911 or E-911 
services, of any fee or charge specifically designated or presented as 
dedicated by a State or political subdivision thereof for the support of 
911 or E-911 services if no portion of the revenue derived from such fee 
or charge is obligated or expended for any purpose other than support of 
911 or E-911 services.
    ``(c) Non-Tax Regulatory Proceedings.--Nothing in this Act shall be 
construed to affect any Federal or State regulatory proceeding that is 
not related to taxation.''.
SEC. 6. EXCEPTION FOR VOICE AND OTHER SERVICES OVER THE INTERNET.

    The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by 
section 5, is amended by adding at the end the following:

[[Page 118 STAT. 2618]]

``SEC. 1108. EXCEPTION FOR VOICE SERVICES OVER THE INTERNET.

    ``Nothing in this Act shall be construed to affect the imposition of 
tax on a charge for voice or similar service utilizing Internet Protocol 
or any successor protocol. This section shall not apply to any services 
that are incidental to Internet access, such as voice-capable e-mail or 
instant messaging.''.

SEC. 6A. EXCEPTION FOR TEXAS MUNICIPAL ACCESS LINE FEE.

    The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by 
section 6, is amended by adding at the end the following:

``SEC. 1109. EXCEPTION FOR TEXAS MUNICIPAL ACCESS LINE FEE.

    ``Nothing in this Act shall prohibit Texas or a political 
subdivision thereof from imposing or collecting the Texas municipal 
access line fee pursuant to Texas Local Govt. Code Ann. ch. 283 (Vernon 
2005) and the definition of access line as determined by the Public 
Utility Commission of Texas in its `Order Adopting Amendments to Section 
26.465 As Approved At The February 13, 2003 Public Hearing', issued 
March 5, 2003, in Project No. 26412.''.
SEC. 7. GAO STUDY OF EFFECTS OF INTERNET TAX MORATORIUM ON STATE 
                    AND LOCAL GOVERNMENTS AND ON BROADBAND 
                    DEPLOYMENT.

    The Comptroller General shall conduct a study of the impact of the 
Internet tax moratorium, including its effects on the revenues of State 
and local governments and on the deployment and adoption of broadband 
technologies for Internet access throughout the United States, including 
the impact of the Internet Tax Freedom Act (47 U.S.C. 151 note) on 
build-out of broadband technology resources in rural underserved areas 
of the country. The study shall compare deployment and adoption rates in 
States that tax broadband Internet access service with States that do 
not tax such service, and take into account other factors to determine 
whether the Internet Tax Freedom Act has had an impact on the deployment 
or adoption of broadband Internet access 
services. <<NOTE: Reports. Deadline.>> The Comptroller General shall 
report the findings, conclusions, and any recommendations from the study 
to the Senate Committee on Commerce, Science, and Transportation and the 
House of Representatives Committee on Energy and Commerce no later than 
November 1, 2005.

[[Page 118 STAT. 2619]]

SEC. 8. EFFECTIVE DATE. <<NOTE: 47 USC 151 note.>> 

    The amendments made by this Act take effect on November 1, 2003.

    Approved December 3, 2004.

LEGISLATIVE HISTORY--S. 150 (H.R. 49):
---------------------------------------------------------------------------

HOUSE REPORTS: No. 108-234 accompanying H.R. 49 (Comm. on the 
Judiciary).
SENATE REPORTS: No. 108-155 (Comm. on Commerce, Science, and 
Transportation).
CONGRESSIONAL RECORD:
                                                        Vol. 149 (2003):
                                    Nov. 6, 7, considered in Senate.
                                                        Vol. 150 (2004):
                                    Apr. 27-29, considered and passed 
                                        Senate.
                                    Nov. 19, considered and passed 
                                        House.

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