On September 30, the U.S. House of Representative voted in favor of H.R. 719, which includes provisions extending the Internet Tax Freedom Act (ITFA) through December 11, 2015. The bill, passed earlier in the day by the Senate, will now head to the President for his signature. If signed into law, this temporary extension will give Congress another opportunity to consider whether to re-extend the ITFA moratorium for another set time period or to make the moratorium permanent.

History of the Internet Tax Freedom Act

ITFA prohibits states from taxing Internet access and also prohibits the multiple or discriminatory taxation of electronic commerce. President Bill Clinton signed the ITFA moratorium into law on October 21, 1998. Congress has since extended ITFA four times: in 2001, 2004, 2007 and 2014. President Obama signed the most recent extension, H.R. 83, which extended the moratorium through September 2015. Thus, absent this extension, ITFA will expire on October 1 of this year. Because Congress enacted ITFA in 1998, limited guidance exists as to how the states would tax Internet access in the law’s absence.