(4) Inconsistent and unadministrable taxes im-
posed on Internet activity by State and local govern-
ments threaten not only to subject consumers, busi-
nesses, and other users engaged in interstate and
foreign commerce to multiple, confusing, and bur-
densome taxation, but also to restrict the growth
and continued technological maturation of the
Internet itself, and to call into question the contin-
ued viability of this dynamic medium.
(5) Because the tax laws and regulations of so
many jurisdictions were established before the
Internet or interactive computer services, their appli-
cation to this new medium in unintended and unpre-
dictable ways threatens every Internet user, access
provider, vendor, and interactive computer service
provider.
(6) The electronic marketplace of services,
products, and ideas available through the Internet or
interactive computer services can be especially bene-
ficial to senior citizens, the physically challenged,
citizens in rural areas, and small businesses. It also
offers a variety of uses and benefits for educational
institutions and charitable organizations.
(7) Consumers, businesses, and others engaging
in interstate and foreign commerce through the
Internet or interactive computer services could be-
come subject to more than 30,000 separate taxing
jurisdictions in the United States alone.
(8) The consistent and coherent national policy
regarding taxation of Internet activity that is needed
to avoid burdening this evolving form of interstate
and foreign commerce can best be achieved by the
United States exercising its authority under Article
I, Section 8, Clause 3 of the United States Constitu-
tion.
SEC. 3. MORATORIUM ON IMPOSITION OF TAXES ON
INTERNET 
OR 
INTERACTIVE 
COMPUTER
SERVICES.
(a) MORATORIUM.—Except as otherwise provided in
this section, no State or local government (including any
political subdivision) may impose, assess, or attempt to
collect any tax or fee directly or indirectly on—
(1) the Internet or interactive computer serv-
ices; or
(2) the use of the Internet or interactive com-
puter services.
(b) PRESERVATION OF STATE AND LOCAL TAXING
AUTHORITY.—Subsection (a)—
(1) does not apply to taxes imposed on and
measured by net income derived from the Internet or
interactive computer services;
(2) does not apply to fairly apportioned busi-
ness license taxes applied to businesses that have a
business location in the taxing jurisdiction, and
(3) does not affect the authority of a State, or
political subdivision thereof, to impose a sales or use
tax on sales or other transactions effected by use of
the Internet or interactive computer services if—
(A) the tax is the same as the tax imposed
and collected by that State, or political subdivi-
sion thereof, on sales or interstate transactions
effected by mail order, telephone, or other re-
mote means within its taxing jurisdiction; and
(B) the obligation to collect the tax from
sales or other transactions effected by use of
the Internet or interactive computer services is
imposed on the same person or entity as in the
case of sales or transactions effected by mail
order, telephone, or other remote means.
SEC. 4. ADMINISTRATION POLICY RECOMMENDATIONS TO
CONGRESS.
(a) CONSULTATIVE GROUP.—The Secretaries of the
Treasury, Commerce, or State, in consultation with appro-
priate committees of the Congress, consumer and business
groups, States and political subdivisions thereof, and other
appropriate groups, shall—
(1) undertake an examination of United States
domestic and international taxation of the Internet
and interactive computer services, as well as com-
merce conducted thereon; and
(2) jointly submit appropriate policy rec-
ommendations concerning United States domestic
and foreign policies toward taxation of the Internet
and interactive computer services, if any, to the
President within 18 months after the date of enact-
ment of this Act.
(b) PRESIDENT.—Not later than 2 years after the
date of enactment of this Act, the President shall transmit
to the appropriate committees of Congress policy rec-
ommendations on the taxation of sales and other trans-
actions effected on the Internet or through interactive
computer services.
(c) RECOMMENDATIONS TO BE CONSISTENT WITH
TELECOMMUNICATIONS ACT
OF 1996 POLICY STATE-
MENT.—The Secretaries and the President shall take care
to ensure that any such policy recommendations are fully
consistent with the policy set forth in paragraphs (1) and
(2) of section 230(b) of the Communications Act of 1934
(47 U.S.C. 230(b)).
SEC. 5. BAN ON REGULATION OF INTERNET PRICES BY THE
FEDERAL COMMUNICATIONS COMMISSION.
(a) PROHIBITION ON COMMISSION REGULATION OF
COMPUTER SERVICES.—Section 230 of the Communica-
tions Act of 1934 (47 U.S.C. 230) is amended—
(1) by redesignating subsections (d) and (e) as
subsections (e) and (f), respectively; and
(2) by inserting after subsection (c) the follow-
ing new subsection:
‘‘(d) PROHIBITION ON COMMISSION REGULATION OF
COMPUTER SERVICES.—The Commission shall have no
authority or jurisdiction under this Act, nor shall any
State commission have any authority or jurisdiction, to
regulate the prices or charges paid by subscribers for
interactive computer services, or information services
transmitted through the Internet, except for the require-
ment in section 254(h) that such services be provided at
affordable rates to rural health care providers, schools,
and libraries.’’.
(b) CONFORMING AMENDMENT.—Section 223(h)(2)
of the Communications Act of 1934 (47 U.S.C. 223(h)(2))
is amended by striking ‘‘230(e)(2)’’ and inserting
‘‘230(f)(2)’’.
SEC. 6. DECLARATION THAT THE INTERNET BE FREE OF
FOREIGN TARIFFS, TRADE BARRIERS, 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 Asia Pacific
Economic Cooperation Council, or other appropriate inter-
national fora to establish activity on the Internet and
interactive computer services is free from tariff and tax-
ation.
SEC. 7. DEFINITIONS.
For purposes of this Act—
(1) INTERNET; INTERACTIVE COMPUTER SERV-
ICE.—The terms ‘‘Internet’’ and ‘‘interactive com-
puter service’’ have the meaning given such terms by
paragraphs (1) and (2), respectively, of section
230(e) of the Communications Act of 1934 (47
U.S.C. 230(e)).
(2) TAX.—The term ‘‘tax’’ includes any tax, li-
cense, or fee that is imposed by any governmental
entity and the imposition on the seller of an obliga-
tion to collect and remit a tax imposed on the buyer.
Æ