II 

108TH CONGRESS 

2D SESSION S. 2084

To revive and extend the Internet Tax Freedom Act for 2 years, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 12, 2004

Mr. ALEXANDER (for himself, Mr. CARPER, Mr. DORGAN, Mrs. FEINSTEIN, 

Mr. GRAHAM of Florida, Mr. HOLLINGS, Mrs. HUTCHISON, Mr. INOUYE, 

Mr. LAUTENBERG, Mr. ROCKEFELLER, and Mr. VOINOVICH) introduced 

the following bill; which was read twice and referred to the Committee 

on Commerce, Science and Transportation 

A BILL

To revive and extend the Internet Tax Freedom Act for 

2 years, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Internet Tax Ban Ex5 tension and Improvement Act’’. 

6 SEC. 2. 2-YEAR EXTENSION OF MORATORIUM. 

7 Section 1101(a) of the Internet Tax Freedom Act (47 

8 U.S.C. 151 note) is amended—
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1 (1) by striking ‘‘2003—’’ and inserting 

2 ‘‘2005:’’; 

3 (2) by striking paragraph (1) and inserting the 

4 following: 

5 ‘‘(1) Taxes on Internet access.’’; and 

6 (3) by striking ‘‘multiple’’ in paragraph (2) and 

7 inserting ‘‘Multiple’’. 

8 SEC. 3. EXCEPTIONS FOR CERTAIN TAXES. 

9 The Internet Tax Freedom Act (47 U.S.C. 151 note) 

10 is amended—

11 (1) by redesignating section 1104 as section 

12 1105; and 

13 (2) by inserting after section 1103 the fol14 lowing: 

15 ‘‘SEC. 1104. EXCEPTIONS FOR CERTAIN TAXES. 

16 ‘‘(a) PRE-OCTOBER, 1998, TAXES.—Section 1101(a) 

17 does not apply to a tax on Internet access (as that term 

18 was defined in section 1104(5) of this Act as that section 

19 was in effect on the day before the date of enactment of 

20 the Internet Tax Ban Extension and Improvement Act) 

21 that was generally imposed and actually enforced prior to 

22 October 1, 1998, if, before that date, the tax was author23 ized by statute and either— 

24 ‘‘(1) a provider of Internet access services had a 

25 reasonable opportunity to know by virtue of a rule 
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1 or other public proclamation made by the appro2 priate administrative agency of the State or political 

3 subdivision thereof, that such agency has interpreted 

4 and applied such tax to Internet access services; or 

5 ‘‘(2) a State or political subdivision thereof gen6 erally collected such tax on charges for Internet ac7 cess. 

8 ‘‘(b) TAXES ON TELECOMMUNICATIONS SERVICES.—

9 Section 1101(a) does not apply to a tax on Internet access 

10 that was generally imposed and actually enforced as of 

11 November 1, 2003, if, as of that date, the tax was author12 ized by statute and either— 

13 ‘‘(1) a provider of Internet access services had a 

14 reasonable opportunity to know by virtue of a rule 

15 or other public proclamation made by the appro16 priate administrative agency of the State or political 

17 subdivision thereof, that such agency has interpreted 

18 and applied such tax to Internet access services; or 

19 ‘‘(2) a State or political subdivision thereof gen20 erally collected such tax on charges for Internet ac21 cess service.’’. 

22 SEC. 4. CHANGE IN DEFINITIONS OF INTERNET ACCESS 

23 SERVICE. 

24 (a) IN GENERAL.—Paragraph (3)(D) of section 

25 1101(e) of the Internet Tax Freedom Act (47 U.S.C. 151 
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1 note) is amended by striking the second sentence and in2 serting ‘‘The term ‘Internet access service’ does not in3 clude telecommunications services, except to the extent 

4 such services are purchased, used, or sold by an Internet 

5 access provider to connect a purchaser of Internet access 

6 to the Internet access provider.’’. 

7 (b) CONFORMING AMENDMENTS.—

8 (1) Paragraph (2)(B)(i) of section 1105 of that 

9 Act, as redesignated by subsection (a), is amended 

10 by striking ‘‘except with respect to a tax (on Inter11 net access) that was generally imposed and actually 

12 enforced prior to October 1, 1998,’’. 

13 (2) INTERNET ACCESS.—Paragraph (5) of sec14 tion 1105 of that Act, as redesignated by subsection 

15 (a), is amended by striking the second sentence and 

16 inserting ‘‘The term ‘Internet access’ does not in17 clude telecommunications services, except to the ex18 tent such services are purchased, used, or sold by an 

19 Internet access provider to connect a purchaser of 

20 Internet access to the Internet access provider.’’. 

21 (3) Paragraph (10) of section 1105 of that Act, 

22 as redesignated by subsection (a), is amended to 

23 read as follows: 

24 ‘‘(10) TAX ON INTERNET ACCESS.—
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1 ‘‘(A) IN GENERAL.—The term ‘tax on 

2 Internet access’ means a tax on Internet access, 

3 regardless of whether such tax is imposed on a 

4 provider of Internet access or a buyer of Inter5 net access and regardless of the terminology 

6 used to describe the tax. 

7 ‘‘(B) GENERAL EXCEPTION.—The term 

8 ‘tax on Internet access’ does not include a tax 

9 levied upon or measured by net income, capital 

10 stock, net worth, or property value.’’. 

11 SEC. 5. ACCOUNTING RULE. 

12 The Internet Tax Freedom Act (47 U.S.C. 151 note) 

13 is amended by adding at the end the following: 

14 ‘‘SEC. 1106. ACCOUNTING RULE. 

15 ‘‘(a) IN GENERAL.—If charges for Internet access 

16 are aggregated with and not separately stated from 

17 charges for telecommunications services or other charges 

18 that are subject to taxation, then the charges for Internet 

19 access may be subject to taxation unless the Internet ac20 cess provider can reasonably identify the charges for Inter21 net access from its books and records kept in the regular 

22 course of business. 

23 ‘‘(b) DEFINITIONS.—In this section: 
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1 ‘‘(1) CHARGES FOR INTERNET ACCESS.—The 

2 term ‘charges for Internet access’ means all charges 

3 for Internet access as defined in section 1105(5). 

4 ‘‘(2) CHARGES FOR TELECOMMUNICATIONS

5 SERVICES.—The term ‘charges for telecommuni6 cations services’ means all charges for telecommuni7 cations services except to the extent such services 

8 are purchased, used, or sold by an Internet access 

9 provider to connect a purchaser of Internet access to 

10 the Internet access provider.’’. 

11 SEC. 6. EFFECT ON OTHER LAWS. 

12 The Internet Tax Freedom Act (47 U.S.C. 151 note), 

13 as amended by section 4, is amended by adding at the 

14 end the following: 

15 ‘‘SEC. 1107. EFFECT ON OTHER LAWS. 

16 ‘‘(a) UNIVERSAL SERVICE.—Nothing in this Act shall 

17 prevent the imposition or collection of any fees or charges 

18 used to preserve and advance Federal universal service or 

19 similar State programs—

20 ‘‘(1) authorized by section 254 of the Commu21 nications Act of 1934 (47 U.S.C. 254); or 

22 ‘‘(2) in effect on February 8, 1996. 

23 ‘‘(b) 911 AND E–911 SERVICES.—Nothing in this 

24 Act shall prevent the imposition or collection, on a service 

25 used for access to 911 or E–911 services, of any fee or 
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1 charge specifically designated or presented as dedicated by 

2 a State or political subdivision thereof for the support of 

3 911 or E–911 services if no portion of the revenue derived 

4 from such fee or charge is obligated or expended for any 

5 purpose other than support of 911 or E–911 services. 

6 ‘‘(c) NON-TAX REGULATORY PROCEEDINGS.—Noth7 ing in this Act shall be construed to affect any Federal 

8 or State regulatory proceeding that is not related to tax9 ation.’’. 

10 SEC. 7. EFFECTIVE DATE. 

11 The amendments made by this Act take effect No12 vember 1, 2003.

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