Washington (May 3, 2004) -- The Senate voted by an overwhelming 93 to 3 margin to extend a ban on taxing Internet access for four years, shattering an ongoing deadlock between online providers and state and local governments, who argued that they stood to lose millions in much-needed revenue.
Under the previous ban, which was enacted in 1998 and expired in November, Internet access received through cable TV lines was tax free, but DSL service (digital subscriber line) -- high-speed service over telephone lines -- could be taxed. DSL wasn't as widespread when the initial Internet tax ban was imposed, and many states viewed that technology as among the other services offered by various telecoms, which are taxable.
Under the Senate bill, 27 states that currently tax DSL service have two years to phase that out.
The Bush administration supports extending the ban on Internet taxes. A congressional battle over the issue will be taken up shortly by a House vote. Last year, Congress passed a bill that banned taxes on Internet access permanently. According to published reports, the House bill includes a tax-free rider on phone services offered though the Internet.
-- WebCPA staff
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