The House of Representatives passed H.R. 3086 on July 16, making the Internet Tax Freedom Act (ITFA) permanent. This bill also would let the grandfather clause expire, causing many local governments to lose revenues they currently collect. The debate now shifts to the Senate, where a new bipartisan bill would combine the Marketplace and Internet Tax Fairness Act. ICMA has joined with National Association of Counties, National League of Cities, U.S. Conference of Mayors, Government Finance Officers Association, and the National Association of Telecommunications Officers and Advisors to support Senate Bill 2609, which levels the playing field between Main Street merchants and remote sellers and extends the moratorium on Internet taxes for 10 years while retaining the grandfather clause.

Local government officials are urged to contact their representatives to explain the importance of opposing this legislation. The Center for Budget and Policy Priorities calculates that “the ITFA ban on state and local sales taxation of monthly Internet access fees costs state and local governments about $6.5 billion annually in forgone revenue, and the states and localities currently taxing access under ITFA’s “grandfather” provision would lose at least $500 million on top of that each year if the provision expired.”