The Internet Tax Freedom Act Section by Section Analysis Senator Ron Wyden (D-Or) and Rep. Christopher Cox (R-Ca) March 13, 1997 Section 1: Short title: "The Internet Tax Freedom Act" Section 2: Findings. Sets forth a series of findings, including that the Internet is inherently a matter of interstate commerce; that the Internet operates independently of State lines; that inconsistent and unadministrable taxes imposed on Internet activity by State and local governments subject consumers and businesses to multiple, confusing and burdensome taxation and are creating compliance problems for Internet access providers, vendors and interactive computer service providers; that consumers, businesses and others engaging in interstate commerce through the Internet or interactive computer services could become subject to some 30,000 separate taxing jurisdictions in the United States; and that uniformity, simplicity and fairness are needed regarding taxation of Internet activity to avoid burdening this evolving form of interstate commerce. Section 3: Moratorium on Imposition of Taxes on Internet or Interactive Computer Services Subsection (a), establishes a moratorium on direct and indirect state or local taxes on the Internet or interactive computer services or the use of those services. Subsection (b), preserves state and local authority for taxes for the following types of taxes: (1) taxes on or measured by net income derived from these services, (2) fairly apportioned business license taxes, and (3) sales and use taxes on interstate electronic transactions that are consistent with taxes on mail order and telephone transactions. Section 4: Administration Policy Recommendations to Congress. Subsection (a), Establishes a consultative group of the Secretaries of the Treasury, Commerce and State that will work with State and local governments, consumer and business groups and others to examine U.S. and international taxation of Internet and interactive computer services and submit policy recommendations to the President within 18 months of enactment. Subsection (b), directs the President to transmit to Congress any policy recommendations within two years of enactment. Subsection (c), seeks to ensure that any policy recommendations are consistent with the 1996 Telecommunications Act policy statement regarding promotion of the Internet and interactive computer services. Section 5. Declaration that the Internet Be Free of Foreign Tariffs, Trade Barriers, and Other Restrictions Sets forth the sense of the Congress that the President should seek bilateral and multinational agreements through various international trade organizations to keep the Internet and interactive computer services free from tariffs and taxation. Section 6. Definitions (1) Internet and interactive computer service terms are defined as they are in the Communications Act of 1934, as amended by the 1996 Telecommunications Act. . (2) Defines tax to include any tax, license or fee imposed by any governmental entity and includes the imposition on the seller of an obligation to collect and remit a tax imposed on the buyer.