Senator: Extend moratorium on Net taxes
By Reuters
Special to CNET News.com
November 3, 1999, 4:10 p.m. PT
WASHINGTON--A key senator said he may seek a two-year or longer extension of the current three-year moratorium on new Internet taxes.
Sen. Ron Wyden (D-Oregon), who cosponsored the moratorium, said he worries that ambivalent commissioners or influential outsiders could try to drag out the deliberations of a blue-ribbon panel assigned to study the issue of taxing e-commerce, so that the moratorium expires before Congress can act.
In 1998, Congress forbade new taxes on goods sold over the Net, and established a panel charged to evaluate e-commerce and present its recommendations to the federal legislature. Billions of dollars of goods and services are sold over the Internet, but the tax regimes that govern "brick and mortar" transactions aren't always applicable to the online medium.
The solution [isn't another bill]," Wyden told reporters following his speech. "But it will be one of the things we will be looking at," Wyden said.
Wyden said he plans to discuss different options with the lead House sponsor of the 1998 moratorium law, Rep. Christopher Cox (R-California).
Federal law temporarily bars states and localities from imposing new or other special taxes on Internet services. For instance, they cannot tax the monthly fees that millions of Americans pay to companies such as American Online for Internet access. Nor can they levy "bit taxes," which are measured according to every bit of data transmitted over the Net.
Most states already have repealed many of these fees, and the real tax issue that is emerging for the Congressional panel headed by Virginia governor James Gilmore is whether U.S. lawmakers should remove legal roadblocks preventing localities from taxing goods sold over the Net or via catalog.
The panel is evaluating whether it is fair to ask remote electronic sellers to collect the same level of sales taxes--or any taxes at all--that Main Street stores now collect. It is also studying whether taxes currently levied by thousands of states, cities, counties, and parishes nationwide can be simplified to accommodate a new tax regime.
Lessening the burden
That issue is expected to get new momentum November 15 when seven state and local government groups may propose a simplified tax collection system called the "zero burden" tax.
Under the plan, an online merchant getting an order for goods would first notify an agent representing the state where the purchaser lives, said Harley Duncan, executive director of the Federation of Tax Administrators, at today's forum. The merchant would tell the agent three things--the item, its price, and what local jurisdiction would get the sales tax, Duncan said.
The state agent, who would be considered a "trusted third party," would do the rest--determine if the item is taxable, the appropriate tax rate, and what are the total taxes due, Duncan said. That information would go to the customer before the sale is made so that the buyer can decide whether to proceed, Duncan said.
The third party, using a "network of consortiums" that he would have with payment processing firms, would initiate the electronic payments of the tax to the states, Duncan said. |
