Internet Tax Freedom Act

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The 1998 Internet Tax Freedom Act was a United States law authored by Representative Chris Cox and Senator Ron Wyden, and signed into law on October 21, 1998 by President Bill Clinton in an effort to promote and preserve the commercial, educational, and informational potential of the Internet. This 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. The law also bars multiple taxes on electronic commerce.

Contrary to popular belief, it does not exempt sales made on the internet as they will be taxed at the same rate as non-Internet sales just like mail order sales. The Act did not repeal any state sales or use tax.

It has been thrice extended by the United States Congress since its original enactment. The most recent extension, co-authored by Rep. Cox, Senator George Allen, R-Va, and Sen. Wyden, was titled the Internet Tax Nondiscrimination Act.

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.