A bill to revive and extend the Internet Tax Freedom Act for 2 years, and for other purposes.

Summary: Internet Tax Ban Extension and Improvement Act - Amends the Internet Tax Freedom Act to extend the ban on State taxation of Internet access and on multiple or discriminatory taxes on electronic commerce until November 1, 2005.

Makes such tax ban inapplicable to a tax on Internet access that was generally imposed and enforced prior to October 1, 1998, if, before that date, the tax was authorized by statute and either: (1) a provider of Internet access services had a reasonable opportunity to know that an agency has interpreted and applied such tax to Internet access services; or (2) a State or political subdivision generally collected such tax on charges for Internet access. Applies the same rule for a tax on Internet access that was generally imposed and enforced as of November 1, 2003.

Changes the definition of "Internet access service" to exclude telecommunications services (current law), except to the extent such services are purchased, used, or sold by an Internet access provider to connect a purchaser of Internet access to the Internet access provider. Changes the definition of "tax on Internet access" to: (1) mean a tax on Internet access regardless of whether such tax is imposed on a provider of Internet access or a buyer of Internet access and regardless of the terminology used to describe the tax; and (2) exclude a tax levied upon or measured by net income, capital stock, net worth, or property value.

Permits subjecting Internet access charges to taxation if they are aggregated with telecommunications service charges and the provider cannot identify them from regular business records.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Tax Ban Extension and 
Improvement Act''.

SEC. 2. 2-YEAR EXTENSION OF MORATORIUM.

    Section 1101(a) of the Internet Tax Freedom Act (47 U.S.C. 151 
note) is amended--
            (1) by striking ``2003--'' and inserting ``2005:'';
            (2) by striking paragraph (1) and inserting the following:
            ``(1) Taxes on Internet access.''; and
            (3) by striking ``multiple'' in paragraph (2) and inserting 
        ``Multiple''.

SEC. 3. EXCEPTIONS FOR CERTAIN TAXES.

    The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended--
            (1) by redesignating section 1104 as section 1105; and
            (2) by inserting after section 1103 the following:

``SEC. 1104. EXCEPTIONS FOR CERTAIN TAXES.

    ``(a) Pre-October, 1998, Taxes.--Section 1101(a) does not apply to 
a tax on Internet access (as that term was defined in section 1104(5) 
of this Act as that section was in effect on the day before the date of 
enactment of the Internet Tax Ban Extension and Improvement Act) that 
was generally imposed and actually enforced prior to October 1, 1998, 
if, before that date, the tax was authorized by statute and either--
          ``(1) a provider of Internet access services had a reasonable 
        opportunity to know by virtue of a rule or other public 
        proclamation made by the appropriate administrative agency of 
        the State or political subdivision thereof, that such agency 
        has interpreted and applied such tax to Internet access 
        services; or
          ``(2) a State or political subdivision thereof generally 
        collected such tax on charges for Internet access.
    ``(b) Taxes on Telecommunications Services.--Section 1101(a) does 
not apply to a tax on Internet access that was generally imposed and 
actually enforced as of November 1, 2003, if, as of that date, the tax 
was authorized by statute and either--
          ``(1) a provider of Internet access services had a reasonable 
        opportunity to know by virtue of a rule or other public 
        proclamation made by the appropriate administrative agency of 
        the State or political subdivision thereof, that such agency 
        has interpreted and applied such tax to Internet access 
        services; or
          ``(2) a State or political subdivision thereof generally 
        collected such tax on charges for Internet access service.''.

SEC. 4. CHANGE IN DEFINITIONS OF INTERNET ACCESS SERVICE.

    (a) In General.--Paragraph (3)(D) of section 1101(e) of the 
Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking 
the second sentence and inserting ``The term `Internet access service' 
does not include telecommunications services, except to the extent such 
services are purchased, used, or sold by an Internet access provider to 
connect a purchaser of Internet access to the Internet access 
provider.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2)(B)(i) of section 1105 of that Act, as 
        redesignated by subsection (a), is amended by striking ``except 
        with respect to a tax (on Internet access) that was generally 
        imposed and actually enforced prior to October 1, 1998,''.
            (2) Internet access.--Paragraph (5) of section 1105 of that 
        Act, as redesignated by subsection (a), is amended by striking 
        the second sentence and inserting ``The term `Internet access' 
        does not include telecommunications services, except to the 
        extent such services are purchased, used, or sold by an 
        Internet access provider to connect a purchaser of Internet 
        access to the Internet access provider.''.
            (3) Paragraph (10) of section 1105 of that Act, as 
        redesignated by subsection (a), is amended to read as follows:
            ``(10) Tax on internet access.--
                    ``(A) In general.--The term `tax on Internet 
                access' means a tax on Internet access, regardless of 
                whether such tax is imposed on a provider of Internet 
                access or a buyer of Internet access and regardless of 
                the terminology used to describe the tax.
                    ``(B) General exception.--The term `tax on Internet 
                access' does not include a tax levied upon or measured 
                by net income, capital stock, net worth, or property 
                value.''.

SEC. 5. ACCOUNTING RULE.

    The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by 
adding at the end the following:

``SEC. 1106. ACCOUNTING RULE.

    ``(a) In General.--If charges for Internet access are aggregated 
with and not separately stated from charges for telecommunications 
services or other charges that are subject to taxation, then the 
charges for Internet access may be subject to taxation unless the 
Internet access provider can reasonably identify the charges for 
Internet access from its books and records kept in the regular course 
of business.
    ``(b) Definitions.--In this section:
            ``(1) Charges for internet access.--The term `charges for 
        Internet access' means all charges for Internet access as 
        defined in section 1105(5).
            ``(2) Charges for telecommunications services.--The term 
        `charges for telecommunications services' means all charges for 
        telecommunications services except to the extent such services 
        are purchased, used, or sold by an Internet access provider to 
        connect a purchaser of Internet access to the Internet access 
        provider.''.

SEC. 6. EFFECT ON OTHER LAWS.

    The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by 
section 4, is amended by adding at the end the following:

``SEC. 1107. EFFECT ON OTHER LAWS.

    ``(a) Universal Service.--Nothing in this Act shall prevent the 
imposition or collection of any fees or charges used to preserve and 
advance Federal universal service or similar State programs--
            ``(1) authorized by section 254 of the Communications Act 
        of 1934 (47 U.S.C. 254); or
            ``(2) in effect on February 8, 1996.
    ``(b) 911 and E-911 Services.--Nothing in this Act shall prevent 
the imposition or collection, on a service used for access to 911 or E-
911 services, of any fee or charge specifically designated or presented 
as dedicated by a State or political subdivision thereof for the 
support of 911 or E-911 services if no portion of the revenue derived 
from such fee or charge is obligated or expended for any purpose other 
than support of 911 or E-911 services.
    ``(c) Non-Tax Regulatory Proceedings.--Nothing in this Act shall be 
construed to affect any Federal or State regulatory proceeding that is 
not related to taxation.''.

SEC. 7. EFFECTIVE DATE.

    The amendments made by this Act take effect November 1, 2003.