What tax situations does the Internet tax moratorium cover?
First, the moratorium prevents states and localities from imposing taxes on “Internet access”, unless the state or locality had such a tax in effect prior to the original adoption of the moratorium in October of 1998. Thus, the portion of the charge made to you by your broadband provider that relates to Internet access cannot be taxed by your state or locality. Charges by such providers for services that are not “Internet access” can be taxed. Second, the moratorium prevents states and localities from requiring remote sellers to collect sales or use tax on sales of goods, services or information made over the Internet. A remote seller is one which does not have a taxable presence in the same state as the buyer. If the seller does have a taxable presence in the same state as the buyer, then it can be required to charge the buyer sales or use tax even if the sale was made over the Internet.
First, the moratorium prevents states and localities from imposing taxes on “Internet access”, unless the state or locality had such a tax in effect prior to the original adoption of the moratorium in October of 1998. Thus, the portion of the charge made to you by your Internet provider that relates to Internet access cannot be taxed by your state or locality. Charges by such providers for services that are not “Internet access” can be taxed. Second, the moratorium prevents states and localities from requiring remote sellers to collect sales or use tax on sales of goods, services or information made over the Internet. A remote seller is one which does not have a taxable presence in the same state as the buyer. If the seller does have a taxable presence in the same state as the buyer, then it can be required to charge the buyer sales or use tax even if the sale was made over the Internet.
