Don't Mess With Taxes

The legislative merging of international manufacturing and the Internet is complete.

The Senate this afternoon finally approved H.R. 644, the Trade Facilitation and Trade Enforcement Act of 2015, which the House handily passed last December. Part of the bill permanently prohibits any tax -- and even removes the few existing levies -- on Internet access.

Internet access vs. Internet sales taxes: Senate action on the measure, which primarily streamlines the U.S. Customs system and eases the border clearance process for much shipping and international commerce, had been slowed by lawmakers who also wanted to consider Internet sales taxes as part of the bill.

Supporters of the sales tax bill, known as the Marketplace Fairness Act, believed that tying it to the Internet service tax ban was the best way to get the sales tax measure approved. Sen. Dick Durbin (D-Ill.) had pledged to either block the trade bill for that reason.

Earlier this week, however, Durbin relented after getting a pledge from Senate Majority Leader Mitch McConnell (R-Ky.) to move legislation this year that would let states collect sales tax from Internet retailers.

No more online tax ever: While brick-and-mortar businesses still must wait a bit longer for their online tax wish, Internet users across the country are rejoicing.

As soon as the president signs the bill into law, which is expected, state and local governments will be permanently banned from taxing consumer access to the Internet.

Since the Internet's early days, way back in 1998, Congress has passed a series of bills temporarily prohibiting levies for online access. The idea has been that logging onto to the Internet should be tax-free.

Most Internet users won't see any change. The temporary bans had kept their service tax-free for years.

7 states lose tax option: But those of us in seven states whose Internet access taxes were grandfathered in the first bill banning them will start seeing some tax relief.

Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Wisconsin and my native Texas have been bringing in a combined $563 million a year from Internet access taxes, according to Congressional Research Service data.

Under the soon-to-be new law, those tax collections will begin phasing out and stop completely by 2020.

Let the Internet no-tax parties begin!

You also might find these items of interest:

• European Union's electronic shoppers must deal with digital tax rules
• Cyber Monday 2015 is more costly now that most states have enacted online sales tax laws
• Uncle Sam needs TV-styled tech-savvy staffers to fight growing tax & government website hacking