text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Internet Tax Freedom Act''.
  
  SEC. 2. FINDINGS.
  
      The Congress finds the following:
              (1) As a massive global network spanning not only State but 
          international borders, the Internet is inherently a matter of 
          interstate and foreign commerce within the jurisdiction of the 
          United States Congress under Article I, Section 8 of the United 
          States Constitution.
              (2) Even within the United States, the Internet does not 
          respect State lines and operates independently of State 
          boundaries. Addresses on the Internet are designed to be 
          geographically indifferent. Internet transmissions are 
          insensitive to physical distance and can have multiple 
          geographical addresses.
              (3) Because transmissions over the Internet are made 
          through packet-switching, it is impossible to determine with 
          any degree of certainty the precise geographic route or 
          endpoints of specific Internet transmissions, and infeasible to 
          separate intrastate from interstate, and domestic from foreign, 
          Internet transmissions.
              (4) Inconsistent and unadministrable taxes imposed on 
          Internet activity by State and local governments threaten not 
          only to subject consumers, businesses, and other users engaged 
          in interstate and foreign commerce to multiple, confusing, and 
          burdensome taxation, but also to restrict the growth and 
          continued technological maturation of the Internet itself, and 
          to call into question the continued 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 application to this new 
          medium in unintended and unpredictable 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 beneficial 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 become 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 
          Constitution.
  
  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 services; or
              (2) the use of the Internet or interactive computer 
          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 business 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 subdivision 
                  thereof, on sales or interstate transactions effected 
                  by mail order, telephone, or other remote 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 appropriate 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 commerce conducted thereon; and
              (2) jointly submit appropriate policy recommendations 
          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 
          enactment 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 recommendations on the taxation of sales and other 
  transactions effected on the Internet or through interactive computer 
  services.
       (c) Recommendations to Be Consistent With Telecommunications Act 
  of 1996 Policy Statement.--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 Communications 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 following 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 requirement 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 Economic Cooperation and 
  Development, the Asia Pacific Economic Cooperation Council, or other 
  appropriate international fora to establish activity on the Internet 
  and interactive computer services is free from tariff and taxation.
  
  SEC. 7. DEFINITIONS.
  
      For purposes of this Act--
              (1) Internet; interactive computer service.--The terms 
          ``Internet'' and ``interactive computer 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, license, or 
          fee that is imposed by any governmental entity and the 
          imposition on the seller of an obligation to collect and remit 
          a tax imposed on the buyer.
target: Internet Tax Freedom Act - Prohibits a State or local government from imposing, assessing, or attempting to collect any tax or fee on the Internet or interactive computer services (ICs) or on their use. Preserves State and local taxing authority with respect to income, license, and sales taxes. 
  Directs the Secretaries of the Treasury, Commerce, or State to: (1) undertake an examination of U.S. and international taxation of the Internet and ICs, as well as commerce conducted thereon; and (2) jointly submit to the President appropriate policy recommendations concerning such taxation.  Directs the President to transmit to the appropriate congressional committees policy recommendations on the taxation of sales and other transactions effected on the Internet or through ICs.  Requires all such recommendations to be consistent with policy statements of the Telecommunications Act of 1996. 
  Amends the Communications Act of 1934 to state that the Federal Communications Commission or any equivalent State commission shall have no regulatory authority or jurisdiction with respect to charges paid by subscribers for ICs or information services transmitted through the Internet, except for the requirement that such services be provided at affordable rates to rural health care providers, schools, and libraries. 
  Expresses the sense of the Congress that the President should seek bilateral and multilateral agreements through various international forums to establish that activity on the Internet and ICs be free from tariff and taxation.
feat_title: Internet Tax Freedom Act