In the Senate of the United States,
October 25, 2007.
Resolved, That the bill from the House of Representa-
tives (H.R. 3678) entitled ‘‘An Act to amend the Internet
Tax Freedom Act to extend the moratorium on certain taxes
relating to the Internet and to electronic commerce.’’, do pass
with the following
AMENDMENT:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Internet Tax Freedom
Act Amendments Act of 2007’’.
SEC. 2. MORATORIUM.
The Internet Tax Freedom Act (47 U.S.C. 151 note)
is amended—
(1) in section 1101(a) by striking ‘‘2007’’ and
inserting ‘‘2014’’, and
(2) in section 1104(a)(2)(A) by striking ‘‘2007’’
and inserting ‘‘2014’’.
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SEC. 3. GRANDFATHERING OF STATES THAT TAX INTERNET
ACCESS.
Section 1104 of the Internet Tax Freedom Act (47
U.S.C. 151 note) is amended by adding at the end the fol-
lowing:
‘‘(c) APPLICATION OF DEFINITION.—
‘‘(1) IN GENERAL.—Effective as of November 1,
2003—
‘‘(A) for purposes of subsection (a), the term
‘Internet access’ shall have the meaning given
such term by section 1104(5) of this Act, as en-
acted on October 21, 1998; and
‘‘(B) for purposes of subsection (b), the term
‘Internet access’ shall have the meaning given
such term by section 1104(5) of this Act as en-
acted on October 21, 1998, and amended by sec-
tion 2(c) of the Internet Tax Nondiscrimination
Act (Public Law 108–435).
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply until June 30, 2008, to a tax on Internet access
that is—
‘‘(A) generally imposed and actually en-
forced on telecommunications service purchased,
used, or sold by a provider of Internet access, but
only if the appropriate administrative agency of
a State or political subdivision thereof issued a
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‘‘(A) means a service that enables users to
connect to the Internet to access content, infor-
mation, or other services offered over the Inter-
net;
‘‘(B) includes the purchase, use or sale of
telecommunications by a provider of a service
described in subparagraph (A) to the extent such
telecommunications are purchased, used or
sold—
‘‘(i) to provide such service; or
‘‘(ii) to otherwise enable users to access
content, information or other services offered
over the Internet;
‘‘(C) includes services that are incidental to
the provision of the service described in subpara-
graph (A) when furnished to users as part of
such service, such as a home page, electronic
mail and instant messaging (including voice-
and video-capable electronic mail and instant
messaging), video clips, and personal electronic
storage capacity;
‘‘(D) does not include voice, audio or video
programming, or other products and services (ex-
cept services described in subparagraph (A), (B),
(C), or (E)) that utilize Internet protocol or any
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successor protocol and for which there is a
charge, regardless of whether such charge is sepa-
rately stated or aggregated with the charge for
services described in subparagraph (A), (B), (C),
or (E); and
‘‘(E) includes a homepage, electronic mail
and instant messaging (including voice- and
video-capable electronic mail and instant mes-
saging), video clips, and personal electronic stor-
age capacity, that are provided independently or
not packaged with Internet access.’’;
(3) by amending paragraph (9) to read as fol-
lows:
‘‘(9) TELECOMMUNICATIONS.—The term ‘tele-
communications’ means ‘telecommunications’ as such
term is defined in section 3(43) of the Communica-
tions Act of 1934 (47 U.S.C. 153(43)) and ‘tele-
communications service’ as such term is defined in
section 3(46) of such Act (47 U.S.C. 153(46)), and in-
cludes communications services (as defined in section
4251 of the Internal Revenue Code of 1986 (26 U.S.C.
4251)).’’, and
(4) in paragraph (10) by adding at the end the
following:
‘‘(C) SPECIFIC EXCEPTION.—
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‘‘(i) SPECIFIED TAXES.—Effective No-
vember 1, 2007, the term ‘tax on Internet
access’ also does not include a State tax ex-
pressly levied on commercial activity, modi-
fied gross receipts, taxable margin, or gross
income of the business, by a State law spe-
cifically using one of the foregoing terms,
that—
‘‘(I) was enacted after June 20,
2005, and before November 1, 2007 (or,
in the case of a State business and oc-
cupation tax, was enacted after Janu-
ary 1, 1932, and before January 1,
1936);
‘‘(II) replaced, in whole or in
part, a modified value-added tax or a
tax levied upon or measured by net in-
come, capital stock, or net worth (or, is
a State business and occupation tax
that was enacted after January 1,
1932 and before January 1, 1936);
‘‘(III) is imposed on a broad
range of business activity; and
‘‘(IV) is not discriminatory in its
application to providers of commu-
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nication services, Internet access, or
telecommunications.
‘‘(ii) MODIFICATIONS.—Nothing in this
subparagraph shall be construed as a limi-
tation on a State’s ability to make modi-
fications to a tax covered by clause (i) of
this subparagraph after November 1, 2007,
as long as the modifications do not substan-
tially narrow the range of business activi-
ties on which the tax is imposed or other-
wise disqualify the tax under clause (i).
‘‘(iii) NO INFERENCE.—No inference of
legislative construction shall be drawn from
this subparagraph regarding the applica-
tion of subparagraph (A) or (B) to any tax
described in clause (i) for periods prior to
November 1, 2007.’’.
SEC. 5. CONFORMING AMENDMENTS.
(a) ACCOUNTING RULE.—Section 1106 of the Internet
Tax Freedom Act (47 U.S.C. 151 note) is amended—
(1) by striking ‘‘telecommunications services’’
each place it appears and inserting ‘‘telecommuni-
cations’’, and
(2) in subsection (b)(2)—
(A) in the heading by striking ‘‘SERVICES’’,
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(B) by striking ‘‘such services’’ and insert-
ing ‘‘such telecommunications’’, and
(C) by inserting before the period at the end
the following: ‘‘or to otherwise enable users to ac-
cess content, information or other services offered
over the Internet’’.
(b) VOICE SERVICES.—The Internet Tax Freedom Act
(47 U.S.C. 151 note) is amended by striking section 1108.
SEC. 6. SUNSET OF GRANDFATHER PROVISIONS.
Section 1104(a) of the Internet Tax Freedom Act is
amended by adding at the end thereof the following:
‘‘(3) EXCEPTION.—Paragraphs (1) and (2) shall
not apply to any State that has, more than 24
months prior to the date of enactment of this para-
graph, enacted legislation to repeal the State’s taxes
on Internet access or issued a rule or other proclama-
tion made by the appropriate agency of the State that
such State agency has decided to no longer apply such
tax to Internet access.’’.
SEC. 7. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall
take effect on November 1, 2007, and shall apply with re-
spect to taxes in effect as of such date or thereafter enacted,