Congress Passes County Taxing Authority Restriction
February 19, 2016
Congress approved a permanent extension of the Internet Tax Freedom Act (ITFA), which preempts state and local government authority to tax internet access services. The bill will now head to President Obama’s desk for signature.
CSAC opposed the extension in perpetuity (most recent letters available here)ITFA was first enacted in 1998 as a temporary moratorium on taxes for Internet access service and was meant to protect and shield the developing technology in its early years. However, the temporary tax was extended repeatedly, despite the advancements in technology and intent of the original measure. The permanent prohibition means further restrictions on counties’ ability to raise revenues appropriate to provide services in their jurisdiction.
This may also have implications for locally levied utility user taxes (UUTs) as more services are being driven through internet-based technology and providers. Counties with UUTs should consider how this could impact locally levied rates.