Internet-Tax Decision Delayed http://web.archive.org/web/20011121015956/www.wired.com/news/...

Internet-Tax Decision Delayed

by Arik Hesseldahl

4:50 p.m. Oct. 2, 1998 PDT

The US Senate postponed a final vote on the Internet Tax Freedom Act until legislators return to session on Tuesday.

If passed, the bill would impose a two-year moratorium on new Internet access and e-commerce taxes. It would also create a commission that would
spend 18 months studying the issue of Internet taxation and then make policy recommendations.

Determining the scope of that commission's responsibilities is hanging the bill up, said David Seldin, a spokesman for Senator Ron Wyden, the Oregon
Democrat who is sponsoring the bill.

"Basically, there are senators who think that the commission ought to be directed to look at catalog sales and broader issues of state tax policy," Seldin
said. "We're working with them to work out some language that will be acceptable. That's the key issue right now."

Earlier in the day, senators voted down an amendment to the bill by Senator Dale Bumpers, an Arkansas Democrat, and supported by Senator Byron
Dorgan, a Democrat from North Dakota. The amendment would have allowed states to collect sales taxes on mail-order goods shipped to customers in
those states.

Bumpers and Dorgan argued that mail-order catalog firms, like Internet commerce firms, have an unfair advantage over Main Street merchants because
they do not collect sales taxes. Wyden responded that the bill seeks to be "technology neutral," giving no unfair advantages to traditional merchants,
catalog companies, or Internet vendors. The Senate defeated the amendment by a vote of 65 to 30.

Another possible amendment may be aimed at repealing Congress' approval for Network Solutions to collect US$60 million in domain-name registration
fees. Passed in May, it allows for retroactive collection to 1995.

The money, which Network Solutions collected via an extra $30 fee for domain-name registrations, is known as the Internet Intellectual Infrastructure
Fund and was earmarked for research into next-generation Internet efforts. Congress approved the fee in response to US District Judge Thomas Hogan's
April decision that the collection amounted to an illegal tax that had not been properly authorized.

A reversal of the approval could mean a legal victory for the American Internet Registrants Association. Its class-action lawsuit contesting the fee was
dismissed by Hogan in September. It could also force the refund of millions of dollars in domain-name registration fees and do away with the fund.

David Lytel, a former adviser to the White House Office of Science and Technology Policy, said if the approval of the tax were repealed the refunds would
amount to about $7 per domain name after administrative costs and legal fees to the association's attorney, William Bode.

In contrast, Bode estimated the refunds would likely amount to $25 per domain name and he is unlikely to receive an unusually large fee should his
clients prevail in the case. He also said he did not expect the amendment to be inserted into the bill at all.

Related Wired Links:

Internet Tax-Free for Now

30.Sep.98

A Taxing Situation
31.Aug.98

California's a Tax-Free Net Zone

24.Aug.98

Net Tax Moratorium Passed

23.Jun.98

House Panel OKs Net Tax Bill

14.May.98

Net Taxation Battle Heats Up

1.Apr.98

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