text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Internet Fairness and Interstate 
  Responsibility Act'' or ``Net FAIR Act''.
  
  SEC. 2. FINDINGS.
  
      Congress makes the following findings:
              (1) By exercising its authority under article I, section 8, 
          clause 3 of the United States Constitution, Congress may best 
          achieve a consistent and coherent national policy regarding 
          regulation and taxation of Internet activity and the 
          concomitant uniformity, simplicity, and fairness that is needed 
          to avoid burdening this evolving form of interstate and foreign 
          commerce.
              (2) Because the Federal Government and State and local 
          governments will have numerous reasons to interact over the 
          Internet with the individuals and companies that use it, a 
          lexicon of terms relating to the Internet and its use is vital.
              (3) A limited number of States have already adopted by law 
          or regulation various forms of taxes that apply to commercial 
          activity that are unique to the Internet or to providers of 
          Internet services.
              (4) There are approximately 30,000 separate taxing 
          jurisdictions in the United States, thus presenting the 
          potential for an enormous variety of taxes and tax rates on 
          Internet activity.
              (5) The unique character of the Internet transcends 
          physical and political boundaries and permits commercial and 
          intellectual communications to move from city to city, State to 
          State, and nation to nation without any set path in a manner 
          that is virtually unparalleled in history.
              (6) The Internet is a global network that offers the 
          potential for entrepreneurial individuals and small businesses 
          throughout the United States to reach customers and markets 
          throughout the world with their products and services.
              (7) The United States must create an example for the rest 
          of the world by preventing discriminatory taxation on Internet 
          activities so that the United States can persuade our trading 
          partners to resist the temptation to tax such activities and 
          thereby limit the potential growth of such activities.
              (8) The innovation and creativity that has helped computer 
          technology evolve into the present-day Internet has thrived in 
          a tax-free environment and should be granted protection from 
          local, State, and Federal taxation in order to permit this new 
          medium to reach its fullest potential.
              (9) 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, and other appropriate 
          international organizations and fora to establish that 
          commercial transactions using the Internet are free from tariff 
          and discriminatory taxation.
  
  SEC. 3. MORATORIUM ON IMPOSITION OF TAXES ON INTERNET AND INTERNET-
                RELATED COMPUTER SERVICES.
  
      (a) Moratorium.--Except as otherwise provided in this section, no 
  State or political subdivision thereof may impose, assess, or attempt 
  to collect a tax directly or indirectly on--
              (1) the Internet or Internet-related services; or
              (2) the use of the Internet or Internet-related services.
      (b) Preservation of State and Local Taxing Authority.--Subsection 
  (a)--
              (1) does not apply to taxes imposed on or measured by net 
          income derived from the Internet or Internet-related services 
          if such taxes are applied uniformly to all businesses;
              (2) does not apply to fairly apportioned business license 
          taxes applied to businesses having a business location in the 
          taxing jurisdiction if such taxes are applied uniformly to all 
          businesses;
              (3) does not affect the authority of a State or political 
          subdivision to impose a sales or use tax on sales or other 
  transactions effected by use of the Internet or Internet-related 
  services if--
                      (A) the tax is the same as the tax generally 
                  imposed and collected by that State or political 
                  subdivision thereof on sales or 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 
                  Internet-related services is imposed on the same person 
                  or entity as in the case of sales or transactions 
                  affected by mail order, telephone, or other remote 
                  means; and
              (4) does not apply to taxes on real or personal property 
          used in connection with the providing of Internet or Internet-
          related services if such taxes are applied to all businesses 
          using real or personal property in connection with their 
          businesses.
      (c) Termination.--The moratorium set forth under subsection (a) 
  shall terminate on December 31, 2001.
  
  SEC. 4. COMMISSION ON INTERNET TAXATION AND REGULATION.
  
      (a) Establishment.--
              (1) In general.--There is established a commission to be 
          known as the Commission on Internet Taxation and Regulation 
          (hereafter in this section referred to as the ``Commission'').
              (2) Membership.--The Commission shall be composed of 15 
          members of whom--
                      (A) one shall be the Secretary of Commerce;
                      (B) one shall be the Secretary of State;
                      (C) one shall be the Secretary of the Treasury; and
                      (D) twelve shall be appointed by the President 
                  without regard to political affiliation, of whom--
                              (i) three shall be the chief executive 
                          officer of a State (including at least one who 
                          is the chief executive officer of a State that 
                          does not impose a sales tax);
                              (ii) three shall be the chief executive 
                          officer of a political subdivision of a State 
                          (including at least one who is the chief 
                          executive officer of a political subdivision 
                          that does not impose a sales tax);
                              (iii) three shall be individuals employed 
                          by or affiliated with companies engaged in 
                          computer manufacturing activities, software 
                          activities, or activities relating to the 
                          Internet or the provision of Internet-related 
                          services; and
                              (iv) three shall be individuals employed by 
                          or affiliated with companies engaged in 
                          electronic commerce (including at least one who 
                          is employed by or affiliated with a company 
                          engaged in mail order commerce).
              (3) Period of appointment; vacancies.--Members shall be 
          appointed for the life of the Commission. Any vacancy in the 
          Commission shall not affect its powers, but shall be filled in 
          the same manner as the original appointment.
              (4) Chairman and vice chairman.--The Commission shall 
          select a Chairman and Vice Chairman from among its members.
              (5) Meetings.--The Commission shall meet at the call of the 
          Chairman.
              (6) Quorum.--A majority of the members of the Commission 
          shall constitute a quorum, but a lesser number of members may 
          hold hearings.
      (b) Duties.--
              (1) In general.--The Commission shall have as its duties 
          the following:
                      (A) To conduct a thorough study of taxation and 
                  regulation of the Internet and Internet-related 
                  services under State and local law and identify any 
                  inconsistencies in such taxation or regulation.
                      (B) To consider the effect of current Federal 
                  statutes and regulations on the Internet and Internet-
                  related services and recommend appropriate 
                  modifications of such statutes and regulations.
                      (C) To propose model legislation (a so-called 
                  ``Uniform Internet Commercial Code'') relating to 
                  commercial transactions on the Internet and to 
                  Internet-related services in order to facilitate 
                  uniform treatment of such transactions and such 
                  services under Federal law and State law.
              (2) Model legislation.--The model legislation under 
          paragraph (1)(C) shall--
                      (A) provide terminology applicable to commercial 
                  transactions on the Internet and to Internet-related 
                  services;
                      (B) define the transactions, services, and other 
                  activities covered by the legislation; and
                      (C) establish regulatory structures and mechanisms 
                  applicable to such transactions, services, and other 
                  activities.
              (3) Adoption of positions.--The Commission may not adopt a 
          position with respect to a matter under this subsection unless 
          the position is approved by at least 10 members of the 
          Commission.
      (c) Report.--Not later than December 31, 2000, the Commission shall 
  submit to Congress and the President a report on its activities under 
  this section. The report shall--
              (1) set forth the findings of the Commission under 
          subsection (b)(1)(A);
              (2) set forth any findings of the Commission under 
          subsection (b)(1)(B), including any recommendations relating to 
          such findings;
              (3) set forth the model legislation proposed under 
          subsection (b)(1)(C); and
              (4) include any additional findings and recommendations 
          that the Commission considers appropriate.
      (d) Powers of Commission.--
              (1) Hearings.--The Commission may hold such hearings, sit 
          and act at such times and places, take such testimony, and 
          receive such evidence as the Commission considers advisable to 
          carry out the purposes of this section.
              (2) Information from federal agencies.--The Commission may 
          secure directly from any Federal department or agency such 
          information as the Commission considers necessary to carry out 
          the provisions of this section. Upon request of the Chairman of 
          the Commission, the head of such department or agency shall 
          furnish such information to the Commission.
              (3) Postal services.--The Commission may use the United 
          States mails in the same manner and under the same conditions 
          as other departments and agencies of the Federal Government.
              (4) Gifts.--The Commission may accept, use, and dispose of 
          gifts or donations of services or property.
      (e) Commission Personnel Matters.--
              (1) Compensation of members.--Each member of the Commission 
          who is not an officer or employee of the Federal Government 
          shall be compensated at a rate equal to the daily equivalent of 
          the annual rate of basic pay prescribed for level IV of the 
          Executive Schedule under section 5315 of title 5, United States 
          Code, for each day (including travel time) during which such 
          member is engaged in the performance of the duties of the 
          Commission. All members of the Commission who are officers or 
          employees of the United States shall serve without compensation 
          in addition to that received for their services as officers or 
          employees of the United States.
              (2) Travel expenses.--The members of the Commission shall 
          be allowed travel expenses, including per diem in lieu of 
          subsistence, at rates authorized for employees of agencies 
          under subchapter I of chapter 57 of title 5, United States 
          Code, while away from their homes or regular places of business 
          in the performance of services for the Commission.
              (3) Staff.--
                      (A) In general.--The Chairman of the Commission 
                  may, without regard to the civil service laws and 
                  regulations, appoint and terminate an executive 
                  director and such other additional personnel as may be 
                  necessary to enable the Commission to perform its 
                  duties. The employment of an executive director shall 
                  be subject to confirmation by the Commission.
                      (B) Compensation.--The Chairman of the Commission 
                  may fix the compensation of the executive director and 
                  other personnel without regard to the provisions of 
                  chapter 51 and subchapter III of chapter 53 of title 5, 
                  United States Code, relating to classification of 
                  positions and General Schedule pay rates, except that 
                  the rate of pay for the executive director and other 
                  personnel may not exceed the rate payable for level V 
                  of the Executive Schedule under section 5316 of such 
                  title.
              (4) Detail of government employees.--Any Federal Government 
          employee may be detailed to the Commission without 
          reimbursement, and such detail shall be without interruption or 
          loss of civil service status or privilege.
              (5) Procurement of temporary and intermittent services.--
          The Chairman of the Commission may procure temporary and 
          intermittent services under section 3109(b) of title 5, United 
          States Code, at rates for individuals which do not exceed the 
          daily equivalent of the annual rate of basic pay prescribed for 
          level V of the Executive Schedule under section 5316 of such 
          title.
      (f) Termination.--The Commission shall terminate 90 days after the 
  date on which the Commission submits its report under subsection (c).
  
  SEC. 5. DEFINITIONS.
  
      In this Act:
              (1) Internet.--The term ``Internet'' means the computer 
          facilities and telecommunications facilities, 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 by wire or radio.
              (2) Internet-related services.--The term ``Internet-related 
          services'' includes the following:
                      (A) Internet access services, including the 
                  storage, processing, and transmission of information 
                  that enables an individual to make use of the resources 
                  found via the Internet.
                      (B) Online services, including the information, 
                  information processing, electronic commerce, and other 
                  services available to an individual as part of a 
                  package of services that are combined with Internet 
                  access service and offered to the user for a single 
                  price.
              (3) Tax.--The term ``tax'' includes any tax, license, or 
          fee that is imposed by any governmental entity, and includes 
          the imposition on the seller of an obligation to collect and 
          remit a tax imposed on the buyer.
target: Internet Fairness and Interstate Responsibility Act or Net FAIR Act - Prohibits a State or political subdivision thereof from imposing, assessing, or attempting to collect any tax on the Internet or Internet-related services or on their use.  Preserves State and local taxing authority with respect to income, license, and sales or use taxes.  Terminates such prohibition on December 31, 2001. 
  Establishes the Commission on Internet Taxation and Regulation to: (1) study the taxation and regulation of the Internet and Internet-related services under State and local law and identify any inconsistencies; (2) recommend appropriate modification to current Federal and State statutes concerning such services; (3) propose model legislation relating to commercial transactions on the Internet in order to facilitate their uniform treatment under Federal and State law; and (4) report to the Congress and the President.
feat_title: Net FAIR Act