To: Lazarus who wrote (73971 ) 10/20/2001 4:15:55 PM From: M0NEYMADE Respond to of 122087 **ALERT**Congress will miss deadline to extend Internet tax ban By MARILYN GEEWAX c.2001 Cox News Service WASHINGTON -- The moratorium that has kept the Internet free of new taxes will expire Sunday after an effort to extend it for two years failed Thursday in the Senate. Internet users are not likely to see new taxes appear suddenly, however. Nearly all state legislatures are recessed for the year, and Congress is expected to move quickly to reinstate the moratorium. On Tuesday, the House approved a two-year extension of the tax ban, which has been in place since 1998. The Senate had not taken action on its own bill, so unanimous approval was needed to get the House version to President Bush's desk before Sunday. That did not happen, because Sen. Byron Dorgan, D-N.D., wanted to extend the moratorium for only eight months. "This is extremely disappointing," said Tim Hugo, executive director of CapNet, a technology industry lobbying group. "You're letting the tax genie out of the bottle." Hugo said he hoped the Senate would act next week, before any state or local governments have an opportunity to enact new taxes. "We hope to salvage this as quickly as possible," he said. The legislation approved by the House would extend the existing moratorium, which covers state and local taxes on Internet access fees and other online services. For two years, most of the nation's governors have been lobbying Congress not to merely extend the moratorium, but to instead craft legislation that would make it easier for states to collect sales taxes on all purchases, whether made in stores, on line or through catalogs. Under current law, sales taxes are collected only from retailers that have a physical presence, such as a store or headquarters, in a state. As e-commerce has grown, many state and local officials have become increasingly concerned about the loss of tax revenues. The University of Tennessee has estimated that governments could lose $440 billion over the next decade. Last spring, senators who support the governors' efforts nearly hammered out a bill that would have opened the door to eventual collection of taxes from online sales. But that effort got bogged down because of objections from lawmakers who wanted to make the Internet tax moratorium permanent. Many state officials had hoped that as the Oct. 21 expiration of the moratorium drew closer, a compromise would be reached. Then terrorists attacked on Sept. 11, an event that "reordered a lot of things in Congress," said Carol Guthrie, spokeswoman for Sen. Ron Wyden, D-Ore. , a supporter of the permanent ban. On the Web: Senate: www.senate.gov CapNet: www.capnet.org Marilyn Geewax's e-mail address is marilyng@coxnews.com ENDIT Story Filed By Cox Newspapers For Use By Clients of the New York Times News Service NYT-10-18-01 1651EDT