Combination ISP Tax Moratorium, Online Sales Tax Bill Introduced

A Senate version of the Internet Tax Freedom Act (ITFA) has been introduced that has been combined with the Marketplace Fairness Act (MFA).

The combined Marketplace and Internet Tax Fairness Act (MITFA) would both extend the moratorium on taxing Internet access services--a bill cable ISP's applaud--and allow for the collection of more taxes from online sales. The Senate bill was introduced by Sen. Mike Enzi (R-Wyo.) earlier this week and has 13 co-sponsors.

Enzi's focus is on the Marketplace Fairness Act, which he introduced in 2013, as the MITFA bill summary makes clear: "A bill to restore States' sovereign rights to enforce State and local sales and use tax laws, and for other purposes."

A House version of a permanent renewal of a standalone PITFA (Permanent Internet Tax Freedom Act) passed earlier this week (

Not surprisingly, the Senate's combo version drew applause from retailers who back the MFA's extension of taxes to more online competitors, while that did not sit well with digital marketers.

“Retailers support keeping Internet access tax free while closing the online loophole that essentially subsidizes online-only retailers against their brick and mortar competitors," said the Retail Industry Leaders Association. "It’s time for the government to take its thumb off the scale and give all retailers a fair shot to compete in the free market."

“Given the overwhelming bipartisan vote on the Marketplace Fairness Act in the Senate and near-universal support in the House for ITFA, it seems obvious that these issues can and should be resolved together this year.”

The Direct Marketing Association saw it differently, sending a letter to the Senate saying that the "fatally flawed" Marketplace Fairness Act should not be attached to the "critically important" renewal of ITFA.

"DMA believes that connecting the two measures does a severe disservice to both bills, threatening to stall ITFA and derail a productive House debate over the future of remote taxation," the group said.

DMA has long opposed the MFA, which would allow states to require online retailers to collect sales tax at the time of a the transaction, while retailers have supported it.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.