[DOCID: f:publ108.110]
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INTERNET TAX FREEDOM ACT AMENDMENTS ACT OF 2007
[[Page 121 STAT. 1024]]
Public Law 110-108
110th Congress
An Act
To amend the Internet Tax Freedom Act to extend the moratorium on
certain taxes relating to the Internet and to electronic <<NOTE: Oct.
31, 2007 - [H.R. 3678]>> commerce.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Internet Tax Freedom Act
Amendments Act of 2007. Communications and tele-communications. 47 USC
609 note.>> assembled,
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.-- <<NOTE: Effective date.>> 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) <<NOTE: Applicability.>> 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
[[Page 121 STAT. 1025]]
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.-- <<NOTE: Effective
date.>> Effective November 1, 2007, the term `tax
on Internet access' also does not include a State
tax expressly levied on commercial activity,
[[Page 121 STAT. 1026]]
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 <<NOTE: 47 USC 151
note.>> 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.''.
[[Page 121 STAT. 1027]]
SEC. 7. <<NOTE: 47 USC 151 note.>> 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).
Approved October 31, 2007.
LEGISLATIVE HISTORY--H.R. 3678 (S. 2128):
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HOUSE REPORTS: No. 110-372 (Comm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 153 (2007):
Oct. 16, considered and passed House.
Oct. 25, considered and passed Senate, amended.
Oct. 30, House concurred in Senate amendment.
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