FEDERAL PANEL FAILS TO AGREE ON INTERNET TAX PROPOSAL
DALLAS — The Advisory Commission on Electronic Commerce closed its two-day meeting here on Tuesday without reaching a consensus on how best to deal with Internet taxation issues.
The 19-member federal panel, created as part of the 1998 Internet Tax Freedom Act, failed to get the 13 votes, or two-thirds majority, required to send a non-binding recommendation to Congress dealing with online taxation and other telecommunication issues, which it is required by law to do by April 20.
Despite a two-day conclave that was marked by dissension and bickering, the panel, chaired by Virginia Gov. James Gilmore, did agree to send Congress its business members’ plan.
That plans calls for an extension of a moratorium on new Internet taxes until October 2006, a permanent ban on Internet usage and access taxes, and the elimination of 3.2 percent telephone excise tax enacted in 1898 to finance the Spanish-American War.
The plan also would define nexus, or physical presence, requirements regarding the application of sales taxes in states outside the state where a corporation is headquartered.
The report also advocates a streamlined sales tax system at the state and local government level with the eventual goal of one rate applicable in all states.
Traditional retailers have been lobbying Congress for some sort of Internet sales tax to create a level playing field, and state legislatures have also expressed concern that they would lose revenues if significant sales switch to online purchases.
The Senate Finance Committee is expected to hold hearings later this spring on the commission’s report.