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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''.

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 following:
''(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 enacted 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 enacted on October 21, 1998, and amended
by section 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 enforced 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 public ruling prior to July 1, 2007, that
applied such tax to such service in a manner that is
inconsistent with paragraph (1); or
''(B) the subject of litigation instituted in a judicial
court of competent jurisdiction prior to July 1, 2007, in which
a State or political subdivision is seeking to enforce, in a
manner that is inconsistent with paragraph (1), such tax on
telecommunications service purchased, used, or sold by a
provider of Internet access.
''(3) No inference.--No inference of legislative construction
shall be drawn from this subsection or the amendments to section
1105(5) made by the Internet Tax Freedom Act Amendments Act of 2007
for any period prior to June 30, 2008, with respect to any tax
subject to the exceptions described in subparagraphs (A) and (B) of
paragraph (2).''.

SEC. 4. DEFINITIONS.

Section 1105 of the Internet Tax Freedom Act (47 U.S.C. 151 note)
is amended--
(1) in paragraph (1) by striking ''services'',
(2) by amending paragraph (5) to read as follows:
''(5) Internet access.--The term 'Internet access'--
''(A) means a service that enables users to connect to the
Internet to access content, information, or other services
offered over the Internet;
''(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 subparagraph (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 (except services described in
subparagraph (A), (B), (C), or (E)) that utilize Internet
protocol or any successor protocol and for which there is a
charge, regardless of whether such charge is separately 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 messaging), video clips, and personal electronic
storage capacity, that are provided independently or not
packaged with Internet access.'';
(3) by amending paragraph (9) to read as follows:
''(9) Telecommunications.--The term 'telecommunications' means
'telecommunications' as such term is defined in section 3(43) of
the Communications Act of 1934 (47 U.S.C. 153(43)) and
'telecommunications service' as such term is defined in section
3(46) of such Act (47 U.S.C. 153(46)), and includes 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.--
''(i) Specified taxes.--Effective November 1, 2007, the
term 'tax on Internet access' also does not include a State
tax expressly levied on commercial activity, modified gross
receipts, taxable margin, or gross income of the business,
by a State law specifically 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 occupation tax, was enacted after January 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
income, 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 communication services, Internet access,
or telecommunications.

''(ii) Modifications.--Nothing in this subparagraph
shall be construed as a limitation on a State's ability to
make modifications to a tax covered by clause (i) of this
subparagraph after November 1, 2007, as long as the
modifications do not substantially narrow the range of
business activities on which the tax is imposed or
otherwise disqualify the tax under clause (i).
''(iii) No inference.--No inference of legislative
construction shall be drawn from this subparagraph
regarding the application 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 ''telecommunications'', and
(2) in subsection (b)(2)--
(A) in the heading by striking ''services'',
(B) by striking ''such services'' and inserting ''such
telecommunications'', and
(C) by inserting before the period at the end the
following: ''or to otherwise enable users to access 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 paragraph, enacted legislation to repeal the State's taxes
on Internet access or issued a rule or other proclamation 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 respect to taxes in effect as of
such date or thereafter enacted, except as provided in section 1104 of
the Internet Tax Freedom Act (47 U.S.C. 151 note).

Speaker of the House of Representatives.

Vice President of the United States and
President of the Senate.
Internet Tax Freedom Act Amendments Act of 2007 - Amends the Internet Tax Freedom Act to extend until November 1, 2014, the moratorium on state and local taxation of Internet access and electronic commerce (moratorium) and the exemption from such moratorium for states with previously enacted Internet tax laws (grandfathering provisions).

Redefines, effective November 1, 2003, "Internet access" to prevent certain states from claiming an expanded exemption under the Internet Tax Nondiscrimination Act from the moratorium. Delays the application of such redefinition until June 30, 2008, for a state or local tax on Internet access that is: (1) generally imposed and actually enforced on telecommunication services; or (2) the subject of litigation instituted in a state court prior to July 1, 2007.

Expands the term "Internet access" to include related communication services (e.g., emails and instant messaging). Redefines "telecommunications" to include unregulated non-utility telecommunications (e.g., cable services).

Provides for a specific exception to the moratorium for certain state business taxes enacted between June 20, 2005, and before November 1, 2007, that do not discriminate against providers of communication services, Internet access, or telecommunications.

Renders inapplicable the grandfather provisions of the Internet Tax Freedom Act for states that repealed or nullified their tax laws on Internet access more than 24 months prior to the enactment of this Act.

Makes the amendments made by this Act effective November 1, 2007.