Union Calendar No. 339
105TH CONGRESS
2D SESSION
H. R. 3849
[Report No. 105–570, Parts I and II]
A BILL
To amend the Communications Act of 1934 to es-
tablish a national policy against Federal and
State regulation of Internet access and online
services, and to exercise congressional jurisdic-
tion over interstate and foreign commerce by es-
tablishing a moratorium on the imposition of ex-
actions that would interfere with the free flow of
commerce conducted over the Internet, and for
other purposes.
JUNE 25, 1998
The Committees on Ways and Means and Rules dis-
charged; committed to the Committee of the Whole
House on the State of the Union and ordered to be
printed
IB
Union Calendar No. 339
105TH CONGRESS
2D SESSION
H. R. 3849
[Report No. 105–570, Parts I and II]
To amend the Communications Act of 1934 to establish a national policy
against Federal and State regulation of Internet access and online serv-
ices, and to exercise congressional jurisdiction over interstate and foreign
commerce by establishing a moratorium on the imposition of exactions
that would interfere with the free flow of commerce conducted over
the Internet, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 12, 1998
Mr. COX of California (for himself and Mr. WHITE) introduced the following
bill; which was referred to the Committee on Commerce, and in addition
to the Committees on Ways and Means, the Judiciary, and Rules, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned
JUNE 5, 1998
Reported from the Committee on Commerce with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
JUNE 5, 1998
Referral to the Committees on Ways and Means, the Judiciary, and Rules
extended for a period ending not later than June 19, 1998
JUNE 19, 1998
Reported from the Committee on the Judiciary with amendments
[Omit the part in black brackets and insert the part printed in boldface roman]
JUNE 19, 1998
Referral to the Committee on Ways and Means and Rules extended for a
period ending not later than June 26, 1998
Transmission Control Protocol/Internet Protocol, or
any predecessor or successor protocol, to transmit
information.
‘‘(2) INTERNET
ACCESS.—The term ‘Internet
access’ means a service that enables users to access
content, information, and other services offered over
the Internet.
‘‘(3) ONLINE SERVICE.—The term ‘online serv-
ice’ means the offering or provision of content or in-
formation services to a user as part of a package of
services that are combined with Internet access.’’.
SEC. 3. FEDERAL REGULATORY FEES.
(a) NO REGULATORY FEES.—Title II of the Commu-
nications Act of 1934 is amended by inserting in section
9(h) (47 U.S.C. 159(h)) after ‘‘47 C.F.R. Part 97’’ ‘‘; or
(3) providers of Internet access or online service’’.
(b) CONFORMING AMENDMENT.—Section 9(h) of the
Communications Act of 1934 (47 U.S.C. 159(h)) is
amended by striking ‘‘or’’ that appears before ‘‘(2)’’.
(c) DETERMINATION.—Not later than 1 year after
the date of the enactment of this Act, the National Tele-
communications and Information Administration shall de-
termine whether any direct or indirect Federal regulatory
fees, other than the fees identified in subsection (a), are
imposed on providers of Internet access or online services,
and if so, make recommendations to the Congress regard-
ing whether such fees should be modified or eliminated.
SEC. 4. REPORT ON FOREIGN COMMERCE.
(a) CONTENTS OF REPORT.—In order to promote
electronic commerce, the Secretary of Commerce, in con-
sultation with appropriate committees of the Congress,
shall undertake an examination of—
(1) barriers imposed in foreign markets on
United States providers of property, goods, services,
or information engaged in electronic commerce and
on United States providers of telecommunications
services;
(2) how the imposition of such barriers will af-
fect United States consumers, the competitiveness of
United States citizens providing property, goods,
service, or information in foreign markets, and the
growth and maturing of the Internet; and
(3) what measures the Government should pur-
sue to foster, promote, and develop electronic com-
merce in the United States and in foreign markets.
(b) PUBLIC COMMENT.—For purposes of this section,
the Secretary of Commerce shall give all interested per-
sons an opportunity to comment on the matters identified
in subsection (a) through written or oral presentations of
data, views, or arguments.
(c) TRANSMITTAL TO THE PRESIDENT.—Not later
than 18 months after the date of the enactment of this
Act, the Secretary of Commerce shall transmit to the
President a report containing the results of the examina-
tion undertaken in accordance with subsection (a).
(d) RECOMMENDATIONS OF THE PRESIDENT.—Not
later than 2 years and 45 days after the date of the enact-
ment of this Act, the President shall review the report de-
scribed in subsection (c) and submit to the appropriate
committees of Congress such policy recommendations as
the President deems necessary or expedient.
øSEC. 5. MORATORIUM ON CERTAIN TAXES.
ø(a) MORATORIUM.—For a period of 3 years follow-
ing the date of the enactment of this Act, neither any
State, nor any political subdivision thereof, shall impose,
assess, collect, or attempt to collect—
ø(1) taxes on Internet access or online services;
ø(2) bit taxes; or
ø(3) multiple or discriminatory taxes on elec-
tronic commerce.
ø(b) EXCEPTION TO MORATORIUM.—(1) The mora-
torium in subsection (a)(1) shall not apply to taxes on
Internet access or online services generally imposed and
actually enforced under State law before March 1, 1998.
ø(2) Subsection (b)(1) shall be enforceable only if a
State enacts a law to expressly impose such tax within
one year from the date of enactment. Failure of a State
to act does not affect liabilities for taxes accrued and en-
forced prior to March 1, 1998 nor does it affect ongoing
litigation relating to such assessments.
ø(c) APPLICATION OF MORATORIUM.—Subsection (a)
shall not apply with respect to the provision of Internet
access or online services that are offered for sale as part
of a package of services that includes services other than
Internet access or online services, unless the service pro-
vider separately states that portion of the billing that ap-
plies to such services on the user’s bill.
øSEC. 6. ADVISORY COMMISSION ON ELECTRONIC COM-
MERCE.
ø(a) ESTABLISHMENT OF COMMISSION.—There is es-
tablished a temporary commission to be known as the Ad-
visory Commission on Electronic Commerce (in this Act
referred to as the ‘‘Commission’’). The Commission
shall—
ø(1) be composed of 29 members, which in-
cludes 2 chairpersons selected in accordance with
subsection (b); and
ø(2) conduct its business in accordance with
the provisions of this Act.
ø(b) MEMBERSHIP.—
ø(1) IN GENERAL.—The Commissioners shall
serve for the life of the Commission. The member-
ship of the Commission shall be as follows:
ø(A) Two representatives from the Federal
Government comprised of the Secretary Of
Commerce and the Secretary of the Treasury,
or their respective representatives.
ø(B) Fourteen representatives from State,
local, and county governments comprised of 2
representatives each from the National gov-
ernors’ Association, the National Conference of
State Legislatures, the Council of State Govern-
ments, the National Association of Counties,
the National League of Cities, and the United
States Conferences of Mayors; and 1 represent-
ative each from the International City/County
Managers Association and the American Legis-
lative Exchange Council.
ø(C) Thirteen representatives of taxpayers
and business, of which 3 shall be appointed by
the President and 2 each shall be appointed by
the Senate majority leader, the Senate minority
leader, the Speaker of the House, the House
majority leader, and the house minority leader.
ø(2)
CHAIRPERSON.—The
Commission
shall
have 2 chairpersons to serve as co-chairpersons. One
of the Chairpersons shall be a representative selected
by the National Governors Association from 1 of the
groups identified in subsection (b)(1)(B). The other
Chairperson shall be a representative selected jointly
by the Speaker of the house of Representatives and
the majority leader of the Senate from 1 of the
groups identified in subsection (b)(1)(C).
ø(3)
APPOINTMENTS.—Appointments
to
the
Commission shall be made not later than 45 days
after the date of enactment of this Act. The Chair-
persons shall be appointed not later than 60 days
after the date of the enactment of this Act.
ø(c) ACCEPTANCE
OF GIFTS
AND GRANTS.—The
Commission may accept, use, and dispose of gifts or
grants of services or property, both real and personal, for
purposes of aiding or facilitating the work of the Commis-
sion. Gifts or grants not used at the expiration of the
Commission shall be returned to the donor or grantor.
ø(d) OTHER RESOURCES.—The Commission shall
have reasonable access to materials, resources, data, and
other information from the Department of Commerce and
the Department of the Treasury. The Commission shall
also have reasonable access to use the facilities of the De-
partment of the Commerce and Department of the Treas-
ury for purposes of conducting meetings.
ø(e) SUNSET.—The existence of the Commission
shall terminate—
ø(1) when the last of the committees of juris-
diction referred to in section 8 concludes consider-
ation of the legislation proposed under section 7; or
ø(2) 3 years after the date of the enactment of
this Act;
whichever occurs first.
ø(f) RULES OF THE COMMISSION.—
ø(1) Fifteen members of the Commission shall
constitute a quorum for conducting the business of
the Commission.
ø(2) Any meetings held by the Commission
shall be duly noticed at least 14 days in advance and
shall be open to the public.
ø(3) The Commission may adopt other rules as
needed.
ø(g) DUTIES OF THE COMMISSION.—The Commis-
sion, in consultation with the National Tax Association
Communications and Electronic Commerce Tax Project,
and other interested parties, shall—
ø(1) identify the taxes, fees, and charges im-
posed on electronic commerce within the United
States that could impede the development of such
commerce;
ø(2) propose a uniform system of definitions of
electronic commerce that may be subject to sales
and use tax within each State;
ø(3) propose a simplified system for sales and
use tax for electronic commerce that would provide
for a single statewide sales or use tax rate (which
rate may be zero), and would establish a method of
distributing to political subdivisions within each
State their proportionate share of such taxes;
ø(4) examine ways to simplify the interstate ad-
ministration of sales and use tax on electronic com-
merce, including a review of the need for a single or
uniform tax registration, single or uniform tax re-
turns, simplified remittance requirements, and sim-
plified administrative procedures;
ø(5) examine the need for an independent third
party collection system that would utilize the Inter-
net to further simplify sales and use tax administra-
tion and collection;
ø(6) examine the level of contacts sufficient to
permit a State to impose a sales or use tax on elec-
tronic commerce that would subject a remote seller
to collection obligations imposed by the State, in-
cluding the definition of a level of contacts below
which a State may not impose collection obligations
on a remote seller;
ø(7) examine the level of contacts sufficient to
permit a State to impose sales or use tax on trans-
actions
not
involving
electronic
commerce,
and
whether collection obligations imposed by a State are
applied in a nondiscriminatory manner with respect
to electronic commerce and such transactions;
ø(8) examine ways to simplify State and local
taxes imposed on the provision of telecommuni-
cations services; and
ø(9) examine other issues that the Commission
determines to be relevant.
ø(h) FEDERAL ADVISORY COMMITTEE ACT.—The
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply with respect to the Commission.
øSEC. 7. LEGISLATIVE RECOMMENDATIONS.
ø(a) TRANSMISSION OF PROPOSED LEGISLATION.—
Not later than 2 years after the date of the enactment
of this Act, the Commission described in section 6 shall
transmit to the President and the Congress proposed legis-
lation reflecting any findings concerning the matters de-
scribed in such section.
ø(b) CONTENTS OF PROPOSED LEGISLATION.—The
proposed legislation submitted under subsection (a) by the
Commission shall have been agreed to by at least 18 mem-
bers of the Commission and shall—
ø(1) define with particularity the level of con-
tacts between a State and remote seller that the
Commission considers should be sufficient to permit
a State to impose collection obligations on the re-
mote seller;
ø(2) provide that if, and only if, a State has
adopted a single sales and use tax rate for electronic
commerce, and adopted simplified procedures for the
administration of its sales and use taxes, including
uniform registration, tax returns, remittance re-
quirements, and filing procedures, then such State
should be authorized to impose on remote sellers a
duty to collect sales or use tax on electronic com-
merce;
ø(3) provide that, effective upon the expiration
of a 4-year period beginning on the date of the en-
actment of such legislation, a State that does not
have in effect a single sales and use tax rate and
simplified administrative procedures shall be deemed
to have in effect a sales and use tax rate on elec-
tronic commerce equal to zero, until such time as
such State does adopt a single sales and use tax rate
and simplified administrative procedures;
ø(4) include uniform definitions of categories of
property, goods, services, or information subject to,
or exempt from, sales and use taxes;
ø(5) make permanent the temporary morato-
rium described in section 5 with respect to Internet
access and online services, as well as such other
taxes (including those described in section 5) that
the Commission deems appropriate;
ø(6) provide a mechanism for the resolution of
disputes between States regarding matters involving
multiple taxation; and
ø(7) include other provisions that the Commis-
sion deems necessary.
ø(c) RECOMMENDATIONS OF THE PRESIDENT.—Not
later than 45 days after the receipt of the Commission’s
legislative proposals, the President shall review such pro-
posals and submit to the appropriate committees of the
Congress such policy recommendations as the President
deems necessary or expedient.¿
SEC. ø8.¿ 5. EXPEDITED CONSIDERATION OF LEGISLATIVE
RECOMMENDATIONS.
(a) Not later than 90 legislative days after the trans-
mission to the Congress of the proposed legislation de-
scribed in section 7, such legislation shall be considered
by the respective committees of jurisdiction within the
House of Representatives and the Senate, and, if reported,
shall be referred to the proper calendar on the floor of
each House for final action.
(b) For purposes of this section, the 90-day period
shall be computed by excluding—
(1) the days on which either House is not in
session because of an adjournment of more than 3
days to a day certain or an adjournment of the Con-
gress sine die; and
(2) any Saturday and Sunday, not excluded
under paragraph (1), when either House is not in
session.
SEC. ø9.¿ 6. DECLARATION THAT THE INTERNET SHOULD
BE FREE OF FOREIGN TARIFFS, TRADE BAR-
RIERS, AND OTHER RESTRICTIONS.
It is the sense of the Congress that the President
should seek bilateral and multilateral agreements through
the World Trade Organization, the Organization for Eco-
nomic Cooperation and Development, the International
Telecommunications Union, the Asia Pacific Economic
Cooperation Council, the Free Trade Area of the Ameri-
cas, and other appropriate international fora. Such agree-
ments should require, inter alia, that the provision of
Internet access or online services be free from undue and
discriminatory regulation by foreign governments and that
electronic commercial transactions between United States
and foreign providers of property, goods, services, and in-
formation be free from undue and discriminatory regula-
tion, international tariffs, and discriminatory taxation.
øSEC. 10. DEFINITIONS.
øFor the purposes of this Act:
ø(1) BIT TAX.—The term ‘‘bit tax’’ means any
tax on electronic commerce expressly imposed on or
measured by the volume of digital information trans-
mitted electronically, or the volume of digital infor-
mation per unit of time transmitted electronically,
but does not include taxes imposed on the provision
of telecommunications services.
ø(2) COMPUTER
SERVER.—The term ‘‘com-
puter server’’ means a computer that functions as a
centralized provider of information and services to
multiple recipients.
ø(3) DISCRIMINATORY
TAX.—The term ‘‘dis-
criminatory tax’’ means—
ø(A) any tax imposed by a State or politi-
cal subdivision thereof on electronic commerce
that—
ø(i) is not generally imposed and le-
gally collectible by such State or such polit-
ical subdivision on transactions involving
similar property, goods, services, or infor-
mation accomplished through other means;
ø(ii) is not generally imposed and le-
gally collectible at the same rate by such
State
or
such
political
subdivision
on
transactions
involving
similar
property,
goods,
services,
or
information
accom-
plished through other means;
ø(iii) imposes an obligation to collect
or pay the tax on a different person or en-
tity than in the case of transactions involv-
ing similar property, goods, services, or in-
formation
accomplished
through
other
means;
ø(iv) establishes a classification of
Internet access provider or online service
provider for purposes of establishing a
higher tax rate to be imposed on such pro-
viders than the tax rate generally applied
to providers of similar information services
delivered through other means; or
ø(B) any tax imposed by a State or politi-
cal subdivision thereof, if—
ø(i) the use of a computer server by
a remote seller to create or maintain a site
on the Internet is considered a factor in
determining a remote seller’s tax collection
obligation; or
ø(ii) a provider of Internet access or
online services is deemed to be the agent of
a remote seller for determining tax collec-
tion obligations as a result of—
ø(I) the provider displaying a re-
mote seller’s information or content
on such provider’s computer server; or
ø(II) the provider maintaining or
taking orders through such provider’s
computer server.
ø(4)
ELECTRONIC
COMMERCE.—The
term
‘‘electronic commerce’’ means any transaction con-
ducted over the Internet or an online service, com-
prising the sale, lease, license, offer, or delivery of
property, goods, services, or information, whether or
not for consideration, and includes the provision of
Internet access and online services.
ø(5) INFORMATION SERVICES.—The term ‘‘in-
formation services’’ has the meaning given such
term in section 3(20) of the Communications Act of
1934 (47 U.S.C. 3(20)) as amended from time to
time.
ø(6) INTERNET.—The term ‘‘Internet’’ means
the combination of computer facilities and electro-
magnetic transmission media, and related equipment
and software, comprising the interconnected world-
wide network of computer networks that employ the
Transmission Control Protocol/Internet Protocol, or
any predecessor or successor protocol, to transmit
information.
ø(7) INTERNET ACCESS.—The term ‘‘Internet
access’’ means a service that enable users to access
content, information, and other services offered over
the Internet.
ø(8) MULTIPLE TAX.—The term ‘‘multiple tax’’
means—
ø(A) any tax that is imposed by one State
or political subdivision thereof on the same or
essentially the same electronic commerce that is
also taxed by any other (or the same State, ex-
cept in the case of sales taxes) State or political
subdivision thereof whether or not at the same
rate or on the same basis without an offsetting
credit for taxes paid in other jurisdictions or
other similar mechanisms for avoiding double
taxation of the same transaction; or
ø(B) any tax on Internet access or online
services if the State or political subdivision
thereof classifies such services as telecommuni-
cations or communications services under State
law and such State or political subdivision
thereof has already imposed a tax on the under-
lying telecommunications services that are used
to provide such services without allowing a
credit for other taxes paid, a sale for resale ex-
emption, or other mechanism for eliminating
duplicate taxation.
ø(9) ONLINE SERVICE.—The term ‘‘online serv-
ice’’ means the offering or provision of content or in-
formation services to a user as part of a package of
services that are combined with Internet access.
ø(10) REMOTE
SELLER.—The term ‘‘remote
seller’’ means a person who sells, leases, licenses, of-
fers, or delivers property, goods, services, or infor-
mation from one State to a purchaser in another
State using the Internet.
ø(11) STATE.—The term ‘‘State’’ means any of
the several States, the District of Columbia, or any
territory or possession of the United States.
ø(12) TAX.—The term ‘‘tax’’ means—
ø(A) any levy, fee, or charge imposed
under governmental authority by any govern-
mental entity; or
ø(B) the imposition of or obligation to col-
lect and to remit to a governmental entity any
such levy, fee, or charge imposed by a govern-
mental entity.
Such term does not include any franchise fees or
similar fees imposed by a State or local franchising
authority, pursuant to section 622 or 653 of the
Communications Act of 1934 (47 U.S.C. 542, 573),
as amended.
ø(13) TELECOMMUNICATIONS SERVICES.—The term
‘‘telecommunications services’’ has the meaning given such
term in section 3(46) of the Communications Act of 1934
(47 U.S.C. 3(46)).
SEC. ø11.¿ 7. NO EXPANSION OF TAX AUTHORITY.
Nothing in this Act shall be construed to expand the
power of any State or political subdivision thereof to col-
lect taxes on Internet access, online services, bits, or elec-
tronic commerce beyond the power that existed on March
1, 1998.
SEC. ø12.¿ 8. PRESERVATION OF AUTHORITY.
Nothing in this Act shall limit or otherwise affect the
implementation of the Telecommunications Act of 1996
(Public Law 104–104) or amendments made by such Act.
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Internet Tax Freedom
Act’’.
SEC. 2. PROVISION OF INTERNET ACCESS AND ONLINE
SERVICES.
Title II of the Communications Act of 1934 is amended
by inserting after section 230 (47 U.S.C. 230) the following
new section:
‘‘SEC. 231. PROHIBITION ON REGULATION OF INTERNET AC-
CESS AND ONLINE SERVICES.
‘‘(a) PROHIBITION.—The Commission shall have no
authority or jurisdiction under this title or section 4(i), nor
shall any State commission have any authority or jurisdic-
tion, to regulate the prices or charges paid by subscribers
for Internet access or online services.
‘‘(b) PRESERVATION OF AUTHORITY.—Nothing in this
subsection shall limit or otherwise affect—
‘‘(1) the Commission’s or State commissions’ im-
plementation of the Telecommunications Act of 1996
SEC. 3. FEDERAL REGULATORY FEES.
(a) NO REGULATORY FEES.—Section 9(h) of the Com-
munications Act of 1934 (47 U.S.C. 159(h)) is amended
by inserting ‘‘; or (3) providers of Internet access or online
service’’ after ‘‘(47 C.F.R. Part 97)’’ .
(b) CONFORMING AMENDMENT.—Section 9(h) of the
Communications Act of 1934 (47 U.S.C. 159(h)) is amend-
ed by striking ‘‘or’’ that appears before ‘‘(2)’’.
(c) DETERMINATION.—Not later than 1 year after the
date of the enactment of this Act, the National Tele-
communications and Information Administration shall de-
termine whether any direct or indirect Federal regulatory
fees, other than the fees identified in subsection (a), are im-
posed on providers of Internet access or online services, and
if so, make recommendations to the Congress regarding
whether such fees should be modified or eliminated.
SEC. 4. REPORT ON FOREIGN COMMERCE.
(a) CONTENTS OF REPORT.—In order to promote elec-
tronic commerce, the Secretary of Commerce, in consulta-
tion with appropriate committees of the Congress, shall un-
dertake an examination of—
(1) barriers imposed in foreign markets on
United States providers of property, goods, services,
or information engaged in electronic commerce and
on United States providers of telecommunications
services;
(2) how the imposition of such barriers will af-
fect United States consumers, the competitiveness of
United States citizens providing property, goods,
service, or information in foreign markets, and the
growth and maturing of the Internet; and
(3) what measures the Government should pursue
to foster, promote, and develop electronic commerce in
the United States and in foreign markets.
(b) PUBLIC COMMENT.—For purposes of this section,
the Secretary of Commerce shall give all interested persons
an opportunity to comment on the matters identified in
subsection (a) through written or oral presentations of data,
views, or arguments.
(c) TRANSMITTAL
TO
THE PRESIDENT.—Not later
than 18 months after the date of the enactment of this Act,
the Secretary of Commerce shall transmit to the President
a report containing the results of the examination under-
taken in accordance with subsection (a).
(d) RECOMMENDATIONS
OF
THE PRESIDENT.—Not
later than 2 years and 45 days after the date of the enact-
ment of this Act, the President shall review the report de-
scribed in subsection (c) and submit to the appropriate
committees of Congress such policy recommendations as the
President deems necessary or expedient.
SEC. 5. MORATORIUM ON CERTAIN TAXES.
(a) MORATORIUM.—For a period of 3 years following
the date of the enactment of this Act, neither any State,
nor any political subdivision thereof, shall impose, assess,
collect, or attempt to collect—
(1) taxes on Internet access or online services;
(2) bit taxes; or
(3) multiple or discriminatory taxes on elec-
tronic commerce.
(b) EXCEPTION TO MORATORIUM.—
(1) IN GENERAL.—The moratorium in subsection
(a)(1) shall not apply to taxes on Internet access or
online services generally imposed and actually en-
forced under State law before March 1, 1998.
(2) ENFORCEABILITY.—Paragraph (1) shall be
enforceable only if a State enacts a law to expressly
impose such tax within one year from the date of en-
actment. Failure of a State to act does not affect li-
abilities for taxes accrued and enforced prior to
March 1, 1998, nor does it affect ongoing litigation
relating to any assessments.
(c) APPLICATION OF MORATORIUM.—Subsection (a)
shall not apply with respect to the provision of Internet
access or online services that are offered for sale as part
of a package of services that includes services other than
Internet access or online services, unless the service provider
separately states that portion of the billing that applies to
such services on the user’s bill.
SEC. 6. ADVISORY COMMISSION ON ELECTRONIC COM-
MERCE.
(a) ESTABLISHMENT OF COMMISSION.—There is estab-
lished a temporary commission to be known as the Advisory
Commission on Electronic Commerce (in this Act referred
to as the ‘‘Commission’’). The Commission shall—
(1) be composed of 29 members, which includes
2 chairpersons selected in accordance with subsection
(b); and
(2) conduct its business in accordance with the
provisions of this Act.
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Commissioners shall serve
for the life of the Commission. The membership of the
Commission shall be as follows:
(A) Two representatives from the Federal
Government comprised of the Secretary of Com-
merce and the Secretary of the Treasury, or their
respective representatives.
(B) Fourteen representatives from State,
local, and county governments comprised of 2
representatives each from the National Gov-
ernors’ Association, the National Conference of
State Legislatures, the Council of State Govern-
ments, the National Association of Counties, the
National League of Cities, and the United States
Conferences of Mayors; and 1 representative each
from the International City/County Managers
Association and the American Legislative Ex-
change Council.
(C) Thirteen representatives of taxpayers
and business, of which 3 shall be appointed by
the President and 2 each shall be appointed by
the Senate majority leader, the Senate minority
leader, the Speaker of the House, the House ma-
jority leader, and the house minority leader.
(2) CHAIRPERSON.—The Commission shall have
2 chairpersons to serve as co-chairpersons. One of the
Chairpersons shall be a representative selected by the
National Governors’ Association from 1 of the groups
identified in subsection (b)(1)(B). The other Chair-
person shall be a representative selected jointly by the
Speaker of the House of Representatives and the ma-
jority leader of the Senate from 1 of the groups iden-
tified in subsection (b)(1)(C).
(3) APPOINTMENTS.—Appointments to the Com-
mission shall be made not later than 45 days after the
date of enactment of this Act. The Chairpersons shall
be appointed not later than 60 days after the date of
the enactment of this Act.
(c) ACCEPTANCE OF GIFTS AND GRANTS.—The Com-
mission may accept, use, and dispose of gifts or grants of
services or property, both real and personal, for purposes
of aiding or facilitating the work of the Commission. Gifts
or grants not used at the expiration of the Commission shall
be returned to the donor or grantor.
(d) OTHER RESOURCES.—The Commission shall have
reasonable access to materials, resources, data, and other
information from the Department of Commerce and the De-
partment of theTreasury. The Commission shall also have
reasonable access to use the facilities of the Department of
Commerce and Department of the Treasury for purposes of
conducting meetings.
(e) SUNSET.—The existence of the Commission shall
terminate—
(1) when the last of the committees of jurisdic-
tion referred to in section 8 concludes consideration
of the legislation proposed under section 7; or
(2) 3 years after the date of the enactment of this
Act;
whichever occurs first.
(f) RULES OF THE COMMISSION.—
(1) Fifteen members of the Commission shall
constitute a quorum for conducting the business of the
Commission.
(2) Any meetings held by the Commission shall
be duly noticed at least 14 days in advance and shall
be open to the public.
(3) The Commission may adopt other rules as
needed.
(g) DUTIES OF THE COMMISSION.—The Commission,
in consultation with the National Tax Association Commu-
nications and Electronic Commerce Tax Project, and other
interested parties, shall—
(1) identify the taxes, fees, and charges imposed
on electronic commerce within the United States that
could impede the development of such commerce;
(2) propose a uniform system of definitions of
electronic commerce that may be subject to sales and
use tax within each State;
(3) propose a simplified system for sales and use
tax for electronic commerce that would provide for a
single statewide sales or use tax rate (which rate may
be zero), and would establish a method of distributing
to political subdivisions within each State their pro-
portionate share of such taxes;
(4) examine ways to simplify the interstate ad-
ministration of sales and use tax on electronic com-
merce, including a review of the need for a single or
uniform tax registration, single or uniform tax re-
turns, simplified remittance requirements, and sim-
plified administrative procedures;
(5) examine the need for an independent third
party collection system that would utilize the Internet
to further simplify sales and use tax administration
and collection;
(6) examine the level of contacts sufficient to per-
mit a State to impose a sales or use tax on electronic
commerce that would subject a remote seller to collec-
tion obligations imposed by the State, including the
definition of a level of contacts below which a State
may not impose collection obligations on a remote
seller;
(7) examine the level of contacts sufficient to per-
mit a State to impose sales or use tax on transactions
not involving electronic commerce, and whether collec-
tion obligations imposed by a State are applied in a
nondiscriminatory manner with respect to electronic
commerce and such transactions;
(8) examine ways to simplify State and local
taxes imposed on the provision of telecommunications
services; and
(9) examine other issues that the Commission de-
termines to be relevant.
(h) FEDERAL ADVISORY COMMITTEE ACT.—The Fed-
eral Advisory Committee Act (5 U.S.C. App.) shall not
apply with respect to the Commission.
SEC. 7. LEGISLATIVE RECOMMENDATIONS.
(a) TRANSMISSION OF PROPOSED LEGISLATION.—Not
later than 2 years after the date of the enactment of this
Act, the Commission described in section 6 shall transmit
to the President and the Congress proposed legislation re-
flecting any findings concerning the matters described in
such section.
(b) CONTENTS OF PROPOSED LEGISLATION.—The pro-
posed legislation submitted under subsection (a) by the
Commission shall have been agreed to by at least 18 mem-
bers of the Commission and shall—
(1) define with particularity the level of contacts
between a State and remote seller that the Commis-
sion considers should be sufficient to permit a State
to impose collection obligations on the remote seller;
(2) provide that if, and only if, a State has
adopted a single sales and use tax rate for electronic
commerce, and adopted simplified procedures for the
administration of its sales and use taxes, including
uniform registration, tax returns, remittance require-
ments, and filing procedures, then such State should
be authorized to impose on remote sellers a duty to
collect sales or use tax on electronic commerce;
(3) provide that, effective upon the expiration of
a 4-year period beginning on the date of the enact-
ment of such legislation, a State that does not have
in effect a single sales and use tax rate and simplified
administrative procedures shall be deemed to have in
effect a sales and use tax rate on electronic commerce
equal to zero, until such time as such State does
adopt a single sales and use tax rate and simplified
administrative procedures;
(4) include uniform definitions of categories of
property, goods, services, or information subject to, or
exempt from, sales and use taxes;
(5) make permanent the temporary moratorium
described in section 5 with respect to Internet access
and online services, as well as such other taxes (in-
cluding those described in section 5) that the Commis-
sion deems appropriate;
(6) provide a mechanism for the resolution of
disputes between States regarding matters involving
multiple taxation; and
(7) include other provisions that the Commission
deems necessary.
(c) RECOMMENDATIONS
OF
THE PRESIDENT.—Not
later than 45 days after the receipt of the Commission’s leg-
islative proposals, the President shall review such proposals
and submit to the appropriate committees of the Congress
such policy recommendations as the President deems nec-
essary or expedient.
SEC. 8. EXPEDITED CONSIDERATION OF LEGISLATIVE REC-
OMMENDATIONS.
(a) Not later than 90 legislative days after the trans-
mission to the Congress of the proposed legislation described
in section 7, such legislation shall be considered by the re-
spective committees of jurisdiction within the House of Rep-
resentatives and the Senate, and, if reported, shall be re-
ferred to the proper calendar on the floor of each House
for final action.
(b) For purposes of this section, the 90-day period shall
be computed by excluding—
(1) the days on which either House is not in ses-
sion because of an adjournment of more than 3 days
to a day certain or an adjournment of the Congress
sine die; and
(2) any Saturday and Sunday, not excluded
under paragraph (1), when either House is not in ses-
sion.
SEC. 9. DECLARATION THAT THE INTERNET SHOULD BE
FREE OF FOREIGN TARIFFS, TRADE BAR-
RIERS, AND OTHER RESTRICTIONS.
It is the sense of the Congress that the President should
seek bilateral and multilateral agreements to remove bar-
riers to global electronic commerce, through the World
Trade Organization, the Organization for Economic Co-
operation and Development, the International Tele-
communications Union, the Asia Pacific Economic Co-
operation Council, the Free Trade Area of the Americas,
and other appropriate international fora. Such agreements
should require, inter alia, that the provision of Internet ac-
cess or online services be free from undue and discrimina-
tory regulation by foreign governments and that electronic
commercial transactions between United States and foreign
providers of property, goods, services, and information be
free from undue and discriminatory regulation, inter-
national tariffs, and discriminatory taxation.
SEC. 10. DEFINITIONS.
For the purposes of this Act: