In the nature of a substitute.

1. Replaces the bill's text with a full substitute

   Replaces the full textEverything after the enacting clause

   In S. 150 · Placed on Calendar Senate

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   SECTION 1. SHORT TITLE.

   This Act may be cited as the "Internet Tax Nondiscrimination Act".

   SEC. 2. PERMANENT EXTENSION OF INTERNET TAX FREEDOM ACT MORATORIUM.

   (a) In General.--Subsection (a) of section 1101 of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended to read as follows:

   "(a) Moratorium.--No State or political subdivision thereof may impose any of the following taxes:

   "(1) Taxes on Internet access.

   "(2) Multiple or discriminatory taxes on electronic commerce.".

   (b) Conforming Amendments.--

   (1) Section 1101 of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking subsection (d) and redesignating subsection (e) as subsection (d).

   (2) Section 1104(10) of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended [struck: by striking "unless" and all that ][inserted: to read as ]follows[struck: through "1998".][inserted: :]

   Inserted: "(10) Tax on internet access.--

   Inserted: "(A) In general.--The term 'tax on Internet access' means a tax on Internet access, regardless of whether such tax is imposed on a provider of Internet access or a buyer of Internet access and regardless of the terminology used to describe the tax.

   Inserted: "(B) General exception.--The term 'tax on Internet access' does not include a tax levied upon or measured by net income, capital stock, net worth, or property value.".

   (3) Section 1104(2)(B)(i) of the Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by striking "except with respect to a tax (on Internet access) that was generally imposed and actually enforced prior to October 1, 1998,".

   Inserted: (c) Internet Access Service; Internet Access.--

   ([struck: c][inserted: 1]) [struck: Clarification][inserted: Internet access service].--[struck: The second sentence of section 1104][inserted: Paragraph ]([struck: 5][inserted: 3])[struck: , and the second sentence ][inserted: (D) ]of section 1101([struck: e][inserted: d])[struck: (3)(D)] (as redesignated by subsection (b)(1) of this [struck: Act][inserted: section])[struck: ,] of the Internet Tax Freedom Act (47 U.S.C. 151 note) [struck: are each ][inserted: is ]amended by [inserted: striking the second sentence and ]inserting "[inserted: The term 'Internet access service' does not include telecommunications services], except to the extent such services are [inserted: purchased, ]used[struck: to provide ][inserted: , or sold by a provider of ]Internet access[struck: " before the period][inserted: to provide Internet access].[inserted: ".]

   Inserted: (2) Internet access.--Section 1104(5) of that Act is amended by striking the second sentence and inserting "The term 'Internet access" does not include telecommunications services, except to the extent such services are purchased, used, or sold by a provider of Internet access to provide Internet access.".

   SEC. 3. 3-YEAR SUNSET FOR PRE-OCTOBER, 1998, TAX EXCEPTION.

   The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended--

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   (1) by redesignating section 1104 as section 1105; and

   (2) by inserting after section 1103 the following:

   "SEC. 1104. PRESERVATION OF PRE-OCTOBER, 1998, STATE AND LOCAL TAX AUTHORITY UNTIL 2006.

   "(a) In General.--Section 1101(a) does not apply to a tax on Internet access that was generally imposed and actually enforced prior to October 1, 1998, if, before that date, the tax was authorized by statute and either--

   "(1) a provider of Internet access services had a reasonable opportunity to know by virtue of a rule or other public proclamation made by the appropriate administrative agency of the State or political subdivision thereof, that such agency has interpreted and applied such tax to Internet access services; or

   "(2) a State or political subdivision thereof generally collected such tax on charges for Internet access.

   "(b) Termination.--This section shall not apply after October 1, 2006.

   "(c) Tax on Internet Access.--Notwithstanding section 1105(10), in this section the term 'tax on Internet access' includes the enforcement or application of any preexisting tax on the sale or use of Internet services if that tax was generally imposed and actually enforced prior to October 1, 1998.".

   SEC. 4. [struck: UNIVERSAL SERVICE][inserted: ACCOUNTING RULE].

   Struck: Nothing in the Internet Tax Freedom Act shall prevent the imposition or collection of any fees or charges used to preserve and advance Federal universal service or similar State programs authorized by section 254 of the Communications Act of 1934.

   Inserted: The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended by adding at the end the following:

   Inserted: "SEC. 1106. ACCOUNTING RULE.

   Inserted: "(a) In General.--If charges for Internet access are aggregated with and not separately stated from charges for telecommunications services or other charges that are subject to taxation, then the charges for Internet access may be subject to taxation unless the Internet access provider can reasonably identify the charges for Internet access from its books and records kept in the regular course of business.

   Inserted: "(b) Definitions.--In this section:

   Inserted: "(1) Charges for internet access.--The term 'charges for Internet access' means all charges for Internet access as defined in section 1105(5).

   Inserted: "(2) Charges for telecommunications services.--The term 'charges for telecommunications services' means all charges for telecommunications services except to the extent such services are purchased, used, or sold by a provider of Internet access to provide Internet access.".

   Inserted: SEC. 5. EFFECT ON OTHER LAWS.

   Inserted: The Internet Tax Freedom Act (47 U.S.C. 151 note), as amended by section 4, is amended by adding at the end the following:

   Inserted: "SEC. 1107. EFFECT ON OTHER LAWS.

   Inserted: "(a) Universal Service.--Nothing in this Act shall prevent the imposition or collection of any fees or charges used to preserve and advance Federal universal service or similar State programs--

   Inserted: "(1) authorized by section 254 of the Communications Act of 1934 (47 U.S.C. 254); or

   Inserted: "(2) in effect on February 8, 1996.

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   Inserted: "(b) 911 and E-911 Services.--Nothing in this Act shall prevent the imposition or collection, on a service used for access to 911 or E-911 services, of any fee or charge specifically designated or presented as dedicated by a State or political subdivision thereof for the support of 911 or E-911 services if no portion of the revenue derived from such fee or charge is obligated or expended for any purpose other than support of 911 or E-911 services.

   Inserted: "(c) Non-Tax Regulatory Proceedings.--Nothing in this Act shall be construed to affect any Federal or State regulatory proceeding that is not related to taxation.".

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