Congress temporarily puts off ITFA showdown
TAX ALERT |
On Sept. 18, 2014, President Obama signed into law H.J. Res. 124, a continuing resolution that extended the Internet Tax Freedom Act (ITFA) through Dec. 11, 2014. The ITFA prohibits federal, state and local governments from taxing Internet access charges and from assessing multiple or discriminatory taxes on electronic commerce. This area has received heightened attention since the Illinois Supreme Court's decision in Performance Marketing Association, Inc. v. Hamer that the state's click-through nexus law was preempted by the ITFA. Prior to passage of H.J. Res. 124, the ITFA was set to expire on Nov. 1, 2014.
It remains uncertain what Congress intends to do with this brief reprieve, as both the Senate's proposed 10-year extension of the ITFA, which that body has tied to passage of the Marketplace Fairness Act, and the House's proposed permanent extension of the ITFA have stalled and show little likelihood of moving forward. It is important to continue to watch the progress of ITFA-extension legislation, as failure to enact an extension will likely signal the imposition of a complicated patchwork of federal, state and local taxes on Internet access and the implementation of taxing regimes that discriminate against electronic commerce.