Advisory Commission on E-Taxes Wraps Up Business

The Advisory Commission on
Electronic Commerce
Thursday announced it will conclude its
work and cease operations on May 16.

After the ACEC delivered its beleaguered final report to Congress,
Commission Chairman, Virginia Governor James S. Gilmore, said all Americans
should take pride in the work of the group.

“Congress is moving forward with legislation that addresses many of the
Commission’s proposals,” Gilmore said. “The electronic frontier is
profoundly impacting the U.S. economy and the life of every American.”

“Let it be known that the 21st Century’s first study of the electronic
economy sounded a clarion call against taxes and in favor of personal
liberty and empowerment,” Gilmore said. “That is our legacy.”

The report included majority policy proposals that were agreed to by a
super-majority of the commissioners. The commission recommended that
Congress act quickly to initiate programs designed to bridge the “Digital
Divide” and provide all U.S. citizens with access to computers and the

The ACEC further recommend that Congress act to protect online privacy in
the administration of any e-commerce taxes and stop any attempts to
establish international tariffs targeted on e-commerce transactions.

The Commission’s key majority policy proposals included repealing the 3
percent federal excise tax on consumers long distance phone bills and a
complete prohibition of taxing Internet access charges.

The ACEC also recommended that Congress clarify “nexus” rules to more
clearly define the circumstances under which businesses must collect sales
taxes on remote sales and when they must pay business activity taxes in a
cyber economy.

Finally, the advisory group recommended that Congress extend the current
moratorium e-taxes another three to five years before the law expires in October.

In the three weeks since the Commission forwarded its report to Congress,
Congressional members have demonstrated support for the ACEC advice.
Legislators introduced bills that would repeal the federal excise tax on
telecommunications charges, extend the current moratorium on
Internet-related taxes, impose a permanent moratorium on state and local
taxes on Internet access, and clarify nexus taxation standards.

Congress will have to act quickly to press such legislative actions through
both the Senate and the House. Congress has less than 60-working days left
before the fall recess this election year.

Appointed by Congress in October 1998 as part of the Internet Tax Freedom
Act, the 19-member Commission was tasked with studying the impact of
federal, state, local and international taxation and tariffs on
transactions using the Internet and Internet access. The Commission’s
recommendations were delivered to Congress ahead of the April 21 deadline on April 12.

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