Holiday Present From Congress: No Internet Access Taxes

The holidays seem to be coming a bit earlier than expected, as Congress has delivered a gift in the form of no Internet access taxes going-forward.

According to, Senate and House members involved in negotiations announced last week that agreement has been achieved on bipartisan legislation to extend permanently a moratorium that bans states from taxing Internet access.

This moratorium was first put in place back in 1998 — ancient history when it comes to the Internet. But some states and localities were fast out of the gates and they had established Internet access taxes before the moratorium was created.

Accordingly, they were permitted to keep their taxation schemes notwithstanding the moratorium. However, under the new bipartisan legislation, these states and localities would be forced to ease them out by the middle of the year 2020.

The states that would be affected — needing to eliminate taxes on Internet access — are Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wisconsin, according to the Congressional Budget Office. They reportedly stand to miss out on several hundreds of millions of dollars per year without these Internet access taxes.

So, it appears that while Santa has been nice to individuals and businesses that do not want to pay taxes for Internet access, he has been naughty to those seven states that now will miss out on Internet access taxes going forward. But at least these seven states were generating tax revenue for 17 years while the other 43 states were not gaining such revenue.

As a side note, The new bipartisan legislation making permanent the moratorium on Internet access taxes was combined with a separate piece of legislation designed to give the federal government more power to strike back against countries that manipulate the value of their currencies to facilitate the selling of their countries’ exports.

Eric Sinrod (@EricSinrod on Twitter) is a partner in the San Francisco office of Duane Morris LLP, where he focuses on litigation matters of various types, including information technology and intellectual property disputes. To receive a weekly email link to Mr. Sinrod’s columns, please email him at with Subscribe in the Subject line. This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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