Recently, the president permanently restricted internet taxes by signing the Internet Tax Freedom Act (ITFA). The ITFA prohibits all levels of government from taxing internet use.
The purpose of the ITFA is to make the internet readily available so the public can benefit from its commercial potential. Widespread internet use has created enormous business opportunities, especially here in St. Louis. With a rapidly growing tech industry, many of our local businesses and vibrant startups deliver their goods and services entirely online.
Internet use is not limited exclusively to technology-based companies. Virtually all businesses utilize the internet daily for numerous functions as part of their e-commerce, marketing, and business development efforts. Without cost-efficient access to the internet, businesses would find it significantly more difficult to generate revenue while communicating and interacting with their customers and clients.
Since the ITFA’s inception nearly 20 years ago, Congress has renewed the act for various periods of time. Unlike the controversial Marketplace Fairness Act – which attempts to regulate sales taxes for purchases made via the internet – the ITFA has long enjoyed cross-party cooperation and Congress has renewed it every time it has been up for a vote. The difference with the current version of the ITFA is that – by being permanent – it will allow businesses to plan on leveraging the internet without taxation in perpetuity.
It is important to note that jurisdictions that taxed internet use prior to the ITFA being passed may continue to do so until the year 2020, as they are an exception under the law’s grandfather provision.