congressional_record: CREC-2004-12-20-pt1-PgE2211-5
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| granule_id | date | congress | session | volume | issue | title | chamber | granule_class | sub_granule_class | page_start | page_end | speakers | bills | citation | full_text |
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| CREC-2004-12-20-pt1-PgE2211-5 | 2004-12-20 | 108 | 2 | DIRECTING SECRETARY OF SENATE TO CORRECT ENROLLMENT OF S. 150 | HOUSE | EXTENSIONS | ALLOTHER | E2211 | E2212 | [{"name": "F. James Sensenbrenner, Jr.", "role": "speaking"}] | [{"congress": "108", "type": "S", "number": "150"}] | 150 Cong. Rec. E2211 | Congressional Record, Volume 150 Issue 140 (Monday, December 20, 2004) [Congressional Record Volume 150, Number 140 (Monday, December 20, 2004)] [Extensions of Remarks] [Pages E2211-E2212] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] DIRECTING SECRETARY OF SENATE TO CORRECT ENROLLMENT OF S. 150 ______ speech of HON. F. JAMES SENSENBRENNER, JR. of wisconsin in the house of representatives Friday, November 19, 2004 Mr. SENSENBRENNER. Mr. Speaker, on November 19, 2004, the House passed both S. Con. Res. 146 and S. 150 under suspension of the rules by voice vote. The amendments made to S. 150 as it was passed by the Senate included a provision that ended some state taxation of Internet access previously interpreted to be allowed by the original 1998 moratorium grandfather exceptions. The final [[Page E2212]] enrolled version of S. 150 was signed by President Bush on December 3, 2004, and became Public Law 108-435. As Chairman of the Committee of jurisdiction in the House, I wish to remark further upon the meaning and intent of Section 1104(a)(2) of the final enrolled version of S. 150 that became Public Law. The intent of this section is to clarify ambiguities associated with the Internet Tax Freedom Act (Pub. L. 106-277, Div. C. Title XI (1998)) (``ITFA''), which created a moratorium on State taxation of Internet access and on multiple and discriminatory taxation of electronic commerce. The ITFA contained an exemption for States that had generally imposed or actually enforced a tax on Internet access prior to October 1, 1998. Thus, States that qualified for ``grandfather'' status could continue to tax Internet access. Subsequent to 1998, however, litigation arose between State taxing authorities and various Internet Service Providers (ISPs), who maintained that certain States wrongly taxed them and their customers for Internet access even though such States had never qualified for grandfather status. One example is that of Tennessee, whose Commissioner of Revenue had assessed sales and use taxes on Internet access based on the State's tax on ``telecommunications services.'' An ISP (Prodigy) challenged the tax and, following several years of litigation, the Tennessee Court of Appeals eventually ruled that the provision of Internet access did not constitute a taxable event within the Tennessee statute. Thus, Tennessee had never met the requirements for grandfather status under the ITFA to tax Internet access. Similarly, Wisconsin taxation authorities claimed to qualify for grandfather status under the ITFA based on a broad State tax on ``telecommunications services'' which was subsequently applied to encompass Internet access through an administrative ruling. Like Tennessee, ISPs have challenged Wisconsin's status as a ``grandfathered'' State under the pre-October 1998 provisions of the ITFA. The crux of the ISPs' argument is that the tax statutes of Tennessee and Wisconsin differ from those of other grandfathered States that meet the conditions of the ITFA. Where other grandfathered States' statutes impose taxes on all services unless an exemption exists, those of States like Wisconsin and Tennessee only tax services if they are enumerated in the statute specifically. Since neither State's statute taxed Internet access explicitly, they were never entitled to assess taxes on Internet access within their States as the ITFA was intended to be construed by Congress. In order to provide clarity about the original intent of Congress and the ITFA, and in order to end further litigation, Section 1104(a)(2) states that the grandfather provision of the ITFA will terminate after November 1, 2007 with the exception of a State telecommunications service tax enacted by State law on or after October 1, 1991 and applied to Internet access through administrative code or regulation issued on or after December 1, 2002. Section 1104(a)(2) should also serve notice that Congress finds particularly egregious the attempts of some States, like Wisconsin, to avoid the Congressional intent and the general moratorium by seeking to impose preexisting telecommunications taxes on Internet access after the enactment of the ITFA through administrative ruling rather than an act of the legislature. It is also the intent of this section to deter any similar efforts by States in the future. As of November 19, 2004, Congress believes that only Wisconsin of the remaining grandfathered states under the 1998 ITFA meets the particular general qualifying criteria set forth in Section 1104(a)(2)(B)(i) & (ii). Therefore the effect of Section 1104(a)(2) will be to end Wisconsin's grandfathered ability to collect taxes on Internet access by November 1, 2006. However, if any other grandfathered States are subsequently found to meet the same generally applicable criteria, they should be treated similarly and their grandfathered taxation status should also end by November 1, 2006. |