With the ban on taxing Internet connections set to expire at the end of October, the Senate has passed a bill that would extend the 1998 Internet Tax Freedom Act yet again, this time for seven years. The moratorium was originally enacted in 1998 and has since been extended twice, in 2001 and 2004. Under the law, local governments are prohibited from levying access taxes on Internet connections (purchases can be subject to applicable state taxes). The nine states that managed to enact Internet access taxes prior to the moratorium's enactment in 1998 are exempt from the ban, and would continue to be under the just-passed legislation.
A version of the legislation passed by the House earlier this week would only extend it for another four years. With the House and Senate having passed slightly different versions of the legislation, the bill will now go to a joint committee to hammer out the differences. Once negotiators agree on a length for the extension and a revised version is passed, it is expected to be signed into law by President Bush.
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