The National Association of Counties (NACo) today delivered a letter to Senate leaders urging them to oppose efforts to permanently extend the Internet Tax Freedom Act (ITFA). Enacted in 1998, ITFA preempts state and local authority to tax Internet access services. Originally intended to be temporary in nature, ITFA has been extended several times and is currently set to expire October of 2016. However, language to permanently extend the prohibition was recently included in compromise legislation negotiated between the U.S. House of Representatives and Senate on an unrelated trade customs enforcement bill.
Due to its explosive growth over the past two decades and the increasing shift of telecommunications and video services to the Internet, NACo expressed concern that permanently extending ITFA would eliminate existing and future revenue that counties could use to provide critical services, such as fire, public safety, education and infrastructure to foster economic competitiveness. These tasks only become more challenging as the demands on county government grow despite state and federal restrictions on generating revenue.
NACo also expressed concern over the fact that Congress would be willing to consider permanently extending the federally imposed prohibition on state and local taxing authority, without also considering a long standing priority for counties – remote sales tax legislation. NACo and other state and local government groups, as well as the business community, support the Marketplace Fairness Act (S. 698) and the Remote Transactions Parity Act (H.R. 2775). These bills would not create a new tax, but instead would require states to simplify their sales taxes and ease compliance in return for the authority to collect the billions of dollars in taxes that are already owed. NACo has urged lawmakers to consider these important pieces of legislation in conjunction with any attempt to extend ITFA.