17 June 1998: See House Report: http://jya.com/hr105-570.txt (118K)

2 June 1998
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

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[DOCID: f:h3849ih.txt]

105th CONGRESS
  2d Session
                                H. R. 3849

To amend the Communications Act of 1934 to establish a national policy
  against Federal and State regulation of Internet access and online
 services, and to exercise congressional jurisdiction over interstate
and foreign commerce by establishing a moratorium on the imposition of
exactions that would interfere with the free flow of commerce conducted
               over the Internet, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 12, 1998

   Mr. Cox of California (for himself and Mr. White) introduced the
following bill; which was referred to the Committee on Commerce, and in
addition to the Committees on Ways and Means, the Judiciary, and Rules,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of
                        the committee concerned

_______________________________________________________________________

                                 A BILL


To amend the Communications Act of 1934 to establish a national policy
  against Federal and State regulation of Internet access and online
 services, and to exercise congressional jurisdiction over interstate
and foreign commerce by establishing a moratorium on the imposition of
exactions that would interfere with the free flow of commerce conducted
               over the Internet, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Tax Freedom Act''.

SEC. 2. PROVISION OF INTERNET ACCESS AND ONLINE SERVICES.

    Title II of the Communications Act of 1934 is amended by inserting
after section 230 (47 U.S.C. 230) the following new section:

``SEC. 231. PROHIBITION ON REGULATION OF INTERNET ACCESS AND ONLINE
              SERVICES.

    ``(a) The Commission shall have no authority or jurisdiction under
this title or section 4(i) of the Communications Act of 1934, as
amended (47 U.S.C. 154(i)), nor shall any State commission have any
authority or jurisdiction, to regulate the prices or charges paid by
subscribers for Internet access or online services.
    ``(b) Preservation of Authority.--Nothing in this subsection shall
limit or otherwise affect--
            ``(1) the Commission's or State Commission's implementation
        of the Telecommunications Act of 1996 (Public Law 104-104) or
        the amendments made by such Act; and
            ``(2) the Commission's or State Commission's authority to
        regulate common carriers that offer Internet access or online
        services in conjunction with the provision of any telephone
        toll, telephone exchange, or exchange access services as such
        terms are defined in title I.
    ``(c) Definitions.--As used in this section:
            ``(1) Internet.--The term `Internet' means the combination
        of computer facilities and electro- magnetic transmission
media, and related equipment and software, comprising the
interconnected world-wide network of computer networks that employ the
Transmission Control Protocol/Internet Protocol, or any predecessor or
successor protocol, to transmit information.
            ``(2) Internet access.--The term `Internet access' means a
        service that enables users to access content, information, and
        other services offered over the Internet.
            ``(3) Online service.--The term `online service' means the
        offering or provision of content or information services to a
        user as part of a package of services that are combined with
        Internet access.''.

SEC. 3. FEDERAL REGULATORY FEES.

    (a) No Regulatory Fees.--Title II of the Communications Act of 1934
is amended by inserting in section 9(h) (47 U.S.C. 159(h)) after ``47
C.F.R. Part 97'' ``; or (3) providers of Internet access or online
service''.
    (b) Conforming Amendment.--Section 9(h) of the Communications Act
of 1934 (47 U.S.C. 159(h)) is amended by striking ``or'' that appears
before ``(2)''.
    (c) Determination.--Not later than 1 year after the date of the
enactment of this Act, the National Telecommunications and Information
Administration shall determine whether any direct or indirect Federal
regulatory fees, other than the fees identified in subsection (a), are
imposed on providers of Internet access or online services, and if so,
make recommendations to the Congress regarding whether such fees should
be modified or eliminated.

SEC. 4. REPORT ON FOREIGN COMMERCE.

    (a) Contents of Report.--In order to promote electronic commerce,
the Secretary of Commerce, in consultation with appropriate committees
of the Congress, shall undertake an examination of--
            (1) barriers imposed in foreign markets on United States
        providers of property, goods, services, or information engaged
        in electronic commerce and on United States providers of
        telecommunications services;
            (2) how the imposition of such barriers will affect United
        States consumers, the competitiveness of United States citizens
        providing property, goods, service, or information in foreign
        markets, and the growth and maturing of the Internet; and
            (3) what measures the Government should pursue to foster,
        promote, and develop electronic commerce in the United States
        and in foreign markets.
    (b) Public Comment.--For purposes of this section, the Secretary of
Commerce shall give all interested persons an opportunity to comment on
the matters identified in subsection (a) through written or oral
presentations of data, views, or arguments.
    (c) Transmittal to the President.--Not later than 18 months after
the date of the enactment of this Act, the Secretary of Commerce shall
transmit to the President a report containing the results of the
examination undertaken in accordance with subsection (a).
    (d) Recommendations of the President.--Not later than 2 years and
45 days after the date of the enactment of this Act, the President
shall review the report described in subsection (c) and submit to the
appropriate committees of Congress such policy recommendations as the
President deems necessary or expedient.

SEC. 5. MORATORIUM ON CERTAIN TAXES.

    (a) Moratorium.--For a period of 3 years following the date of the
enactment of this Act, neither any State, nor any political subdivision
thereof, shall impose, assess, collect, or attempt to collect--
            (1) taxes on Internet access or online services;
            (2) bit taxes; or
            (3) multiple or discriminatory taxes on electronic
        commerce.
    (b) Exception to Moratorium.--(1) The moratorium in subsection
(a)(1) shall not apply to taxes on Internet access or online services
generally imposed and actually enforced under State law before March 1,
1998.
    (2) Subsection (b)(1) shall be enforceable only if a State enacts a
law to expressly impose such tax within one year from the date of
enactment. Failure of a State to act does not affect liabilities for
taxes accrued and enforced prior to March 1, 1998 nor does it affect
ongoing litigation relating to such assessments.
    (c) Application of Moratorium.--Subsection (a) shall not apply with
respect to the provision of Internet access or online services that are
offered for sale as part of a package of services that includes
services other than Internet access or online services, unless the
service provider separately states that portion of the billing that
applies to such services on the user's bill.

SEC. 6. ADVISORY COMMISSION ON ELECTRONIC COMMERCE.

    (a) Establishment of Commission.--There is established a temporary
commission to be known as the Advisory Commission on Electronic
Commerce (in this Act referred to as the ``Commission''). The
Commission shall--
            (1) be composed of 29 members, which includes 2
        chairpersons selected in accordance with subsection (b); and
            (2) conduct its business in accordance with the provisions
        of this Act.
    (b) Membership.--
            (1) In general.--The Commissioners shall serve for the life
        of the Commission. The membership of the Commission shall be as
        follows:
                    (A) Two representatives from the Federal Government
                comprised of the Secretary Of Commerce and the
                Secretary of the Treasury, or their respective
                representatives.
                    (B) Fourteen representatives from State, local, and
                county governments comprised of 2 representatives each
                from the National governors' Association, the National
                Conference of State Legislatures, the Council of State
                Governments, the National Association of Counties, the
                National League of Cities, and the United States
                Conferences of Mayors; and 1 representative each from
                the International City/County Managers Association and
                the American Legislative Exchange Council.
                    (C) Thirteen representatives of taxpayers and
                business, of which 3 shall be appointed by the
                President and 2 each shall be appointed by the Senate
                majority leader, the Senate minority leader, the
                Speaker of the House, the House majority leader, and
                the house minority leader.
            (2) Chairperson.--The Commission shall have 2 chairpersons
        to serve as co-chairpersons. One of the Chairpersons shall be a
        representative selected by the National Governors Association
        from 1 of the groups identified in subsection (b)(1)(B). The
        other Chairperson shall be a representative selected jointly by
        the Speaker of the house of Representatives and the majority
        leader of the Senate from 1 of the groups identified in
        subsection (b)(1)(C).
            (3) Appointments.--Appointments to the Commission shall be
        made not later than 45 days after the date of enactment of this
        Act. The Chairpersons shall be appointed not later than 60 days
        after the date of the enactment of this Act.
    (c) Acceptance of Gifts and Grants.--The Commission may accept,
use, and dispose of gifts or grants of services or property, both real
and personal, for purposes of aiding or facilitating the work of the
Commission. Gifts or grants not used at the expiration of the
Commission shall be returned to the donor or grantor.
    (d) Other Resources.--The Commission shall have reasonable access
to materials, resources, data, and other information from the
Department of Commerce and the Department of the Treasury. The
Commission shall also have reasonable access to use the facilities of
the Department of the Commerce and Department of the Treasury for
purposes of conducting meetings.
    (e) Sunset.--The existence of the Commission shall terminate--
            (1) when the last of the committees of jurisdiction
        referred to in section 8 concludes consideration of the
        legislation proposed under section 7; or
            (2) 3 years after the date of the enactment of this Act;
whichever occurs first.
    (f) Rules of the Commission.--
            (1) Fifteen members of the Commission shall constitute a
        quorum for conducting the business of the Commission.
            (2) Any meetings held by the Commission shall be duly
        noticed at least 14 days in advance and shall be open to the
        public.
            (3) The Commission may adopt other rules as needed.
    (g) Duties of the Commission.--The Commission, in consultation with
the National Tax Association Communications and Electronic Commerce Tax
Project, and other interested parties, shall--
            (1) identify the taxes, fees, and charges imposed on
        electronic commerce within the United States that could impede
        the development of such commerce;
            (2) propose a uniform system of definitions of electronic
        commerce that may be subject to sales and use tax within each
        State;
            (3) propose a simplified system for sales and use tax for
        electronic commerce that would provide for a single statewide
        sales or use tax rate (which rate may be zero), and would
        establish a method of distributing to political subdivisions
        within each State their proportionate share of such taxes;
            (4) examine ways to simplify the interstate administration
        of sales and use tax on electronic commerce, including a review
        of the need for a single or uniform tax registration, single or
uniform tax returns, simplified remittance requirements, and simplified
administrative procedures;
            (5) examine the need for an independent third party
        collection system that would utilize the Internet to further
        simplify sales and use tax administration and collection;
            (6) examine the level of contacts sufficient to permit a
        State to impose a sales or use tax on electronic commerce that
        would subject a remote seller to collection obligations imposed
        by the State, including the definition of a level of contacts
        below which a State may not impose collection obligations on a
        remote seller;
            (7) examine the level of contacts sufficient to permit a
        State to impose sales or use tax on transactions not involving
        electronic commerce, and whether collection obligations imposed
        by a State are applied in a nondiscriminatory manner with
        respect to electronic commerce and such transactions;
            (8) examine ways to simplify State and local taxes imposed
        on the provision of telecommunications services; and
            (9) examine other issues that the Commission determines to
        be relevant.
    (h) Federal Advisory Committee Act.--The Federal Advisory Committee
Act (5 U.S.C. App.) shall not apply with respect to the Commission.

SEC. 7. LEGISLATIVE RECOMMENDATIONS.

    (a) Transmission of Proposed Legislation.--Not later than 2 years
after the date of the enactment of this Act, the Commission described
in section 6 shall transmit to the President and the Congress proposed
legislation reflecting any findings concerning the matters described in
such section.
    (b) Contents of Proposed Legislation.--The proposed legislation
submitted under subsection (a) by the Commission shall have been agreed
to by at least 18 members of the Commission and shall--
            (1) define with particularity the level of contacts between
        a State and remote seller that the Commission considers should
        be sufficient to permit a State to impose collection
        obligations on the remote seller;
            (2) provide that if, and only if, a State has adopted a
        single sales and use tax rate for electronic commerce, and
        adopted simplified procedures for the administration of its
        sales and use taxes, including uniform registration, tax
        returns, remittance requirements, and filing procedures, then
        such State should be authorized to impose on remote sellers a
        duty to collect sales or use tax on electronic commerce;
            (3) provide that, effective upon the expiration of a 4-year
        period beginning on the date of the enactment of such
        legislation, a State that does not have in effect a single
        sales and use tax rate and simplified administrative procedures
        shall be deemed to have in effect a sales and use tax rate on
        electronic commerce equal to zero, until such time as such
        State does adopt a single sales and use tax rate and simplified
        administrative procedures;
            (4) include uniform definitions of categories of property,
        goods, services, or information subject to, or exempt from,
        sales and use taxes;
            (5) make permanent the temporary moratorium described in
        section 5 with respect to Internet access and online services,
        as well as such other taxes (including those described in
        section 5) that the Commission deems appropriate;
            (6) provide a mechanism for the resolution of disputes
        between States regarding matters involving multiple taxation;
        and
            (7) include other provisions that the Commission deems
        necessary.
    (c) Recommendations of the President.--Not later than 45 days after
the receipt of the Commission's legislative proposals, the President
shall review such proposals and submit to the appropriate committees of
the Congress such policy recommendations as the President deems
necessary or expedient.

SEC. 8. EXPEDITED CONSIDERATION OF LEGISLATIVE RECOMMENDATIONS.

    (a) Not later than 90 legislative days after the transmission to
the Congress of the proposed legislation described in section 7, such
legislation shall be considered by the respective committees of
jurisdiction within the House of Representatives and the Senate, and,
if reported, shall be referred to the proper calendar on the floor of
each House for final action.
    (b) For purposes of this section, the 90-day period shall be
computed by excluding--
            (1) the days on which either House is not in session
        because of an adjournment of more than 3 days to a day certain
        or an adjournment of the Congress sine die; and
            (2) any Saturday and Sunday, not excluded under paragraph
        (1), when either House is not in session.

SEC. 9. DECLARATION THAT THE INTERNET SHOULD BE FREE OF FOREIGN
              TARIFFS, TRADE BARRIERS, AND OTHER RESTRICTIONS.

    It is the sense of the Congress that the President should seek
bilateral and multilateral agreements through the World Trade
Organization, the Organization for Economic Cooperation and
Development, the International Telecommunications Union, the Asia
Pacific Economic Cooperation Council, the Free Trade Area of the
Americas, and other appropriate international fora. Such agreements
should require, inter alia, that the provision of Internet access or
online services be free from undue and discriminatory regulation by
foreign governments and that electronic commercial transactions between
United States and foreign providers of property, goods, services, and
information be free from undue and discriminatory regulation,
international tariffs, and discriminatory taxation.

SEC. 10. DEFINITIONS.

    For the purposes of this Act:
            (1) Bit tax.--The term ``bit tax'' means any tax on
        electronic commerce expressly imposed on or measured by the
        volume of digital information transmitted electronically, or
        the volume of digital information per unit of time transmitted
        electronically, but does not include taxes imposed on the
        provision of telecommunications services.
            (2) Computer server.--The term ``computer server'' means a
        computer that functions as a centralized provider of
        information and services to multiple recipients.
            (3) Discriminatory tax.--The term ``discriminatory tax''
        means--
                    (A) any tax imposed by a State or political
                subdivision thereof on electronic commerce that--
                            (i) is not generally imposed and legally
                        collectible by such State or such political
                        subdivision on transactions involving similar
                        property, goods, services, or information
                        accomplished through other means;
                            (ii) is not generally imposed and legally
                        collectible at the same rate by such State or
                        such political subdivision on transactions
                        involving similar property, goods, services, or
                        information accomplished through other means;
                            (iii) imposes an obligation to collect or
                        pay the tax on a different person or entity
                        than in the case of transactions involving
                        similar property, goods, services, or
                        information accomplished through other means;
                            (iv) establishes a classification of
                        Internet access provider or online service
                        provider for purposes of establishing a higher
                        tax rate to be imposed on such providers than
                        the tax rate generally applied to providers of
                        similar information services delivered through
                        other means; or
                    (B) any tax imposed by a State or political
                subdivision thereof, if--
                            (i) the use of a computer server by a
                        remote seller to create or maintain a site on
                        the Internet is considered a factor in
                        determining a remote seller's tax collection
                        obligation; or
                            (ii) a provider of Internet access or
                        online services is deemed to be the agent of a
                        remote seller for determining tax collection
                        obligations as a result of--
                                    (I) the provider displaying a
                                remote seller's information or content
                                on such provider's computer server; or
                                    (II) the provider maintaining or
                                taking orders through such provider's
                                computer server.
            (4) Electronic commerce.--The term ``electronic commerce''
        means any transaction conducted over the Internet or an online
        service, comprising the sale, lease, license, offer, or
        delivery of property, goods, services, or information, whether
        or not for consideration, and includes the provision of
        Internet access and online services.
            (5) Information services.--The term ``information
        services'' has the meaning given such term in section 3(20) of
        the Communications Act of 1934 (47 U.S.C. 3(20)) as amended
        from time to time.
            (6) Internet.--The term ``Internet'' means the combination
        of computer facilities and electromagnetic transmission media,
        and related equipment and software, comprising the
        interconnected worldwide network of computer networks that
        employ the Transmission Control Protocol/Internet Protocol, or
        any predecessor or successor protocol, to transmit information.
            (7) Internet access.--The term ``Internet access'' means a
        service that enable users to access content, information, and
        other services offered over the Internet.
            (8) Multiple tax.--The term ``multiple tax'' means--
                    (A) any tax that is imposed by one State or
                political subdivision thereof on the same or
                essentially the same electronic commerce that is also
                taxed by any other (or the same State, except in the
                case of sales taxes) State or political subdivision
                thereof whether or not at the same rate or on the same
                basis without an offsetting credit for taxes paid in
                other jurisdictions or other similar mechanisms for
                avoiding double taxation of the same transaction; or
                    (B) any tax on Internet access or online services
                if the State or political subdivision thereof
                classifies such services as telecommunications or
                communications services under State law and such State
                or political subdivision thereof has already imposed a
                tax on the underlying telecommunications services that
                are used to provide such services without allowing a
                credit for other taxes paid, a sale for resale
                exemption, or other mechanism for eliminating duplicate
                taxation.
            (9) Online service.--The term ``online service'' means the
        offering or provision of content or information services to a
        user as part of a package of services that are combined with
        Internet access.
            (10) Remote seller.--The term ``remote seller'' means a
        person who sells, leases, licenses, offers, or delivers
        property, goods, services, or information from one State to a
        purchaser in another State using the Internet.
            (11) State.--The term ``State'' means any of the several
        States, the District of Columbia, or any territory or
        possession of the United States.
            (12) Tax.--The term ``tax'' means--
                    (A) any levy, fee, or charge imposed under
                governmental authority by any governmental entity; or
                    (B) the imposition of or obligation to collect and
                to remit to a governmental entity any such levy, fee,
                or charge imposed by a governmental entity.
        Such term does not include any franchise fees or similar fees
        imposed by a State or local franchising authority, pursuant to
        section 622 or 653 of the Communications Act of 1934 (47 U.S.C.
        542, 573), as amended.
            (13) Telecommunications services.--The term
        ``telecommunications services'' has the meaning given such term
        in section 3(46) of the Communications Act of 1934 (47 U.S.C.
        3(46)).

SEC. 11. NO EXPANSION OF TAX AUTHORITY.

    Nothing in this Act shall be construed to expand the power of any
State or political subdivision thereof to collect taxes on Internet
access, online services, bits, or electronic commerce beyond the power
that existed on March 1, 1998.

SEC. 12. PRESERVATION OF AUTHORITY.

    Nothing in this Act shall limit or otherwise affect the
implementation of the Telecommunications Act of 1996 (Public Law 104-
104) or amendments made by such Act.
                                 <all>
