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On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.

 

On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.

 

For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.

 

For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.

 

(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)

(02/12/2015)

President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.

 

For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)

(09/26/2014)

Idaho has passed a bill clarifying that remotely accessed (“cloud”) computer software is not considered tangible personal property and is therefore exempt from Idaho sales tax.  For purposes of the exemption, "remotely accessed computer software" means computer software that a user accesses over the Internet, over private or public networks, or through wireless media, where the user has only the right to use or access the software by means of a license, lease, subscription, service, or other agreement. A Statement of Purpose/Fiscal Note released by the state notes that "cloud" computer software is excluded from state sales tax unless a tangible form of the software is delivered to the user. A previous law (H.B. 243) attempted to clarify the tax treatment of “cloud” computer software, but further amendments were necessary to clarify that such software is not subject to Idaho sales or use tax. Computer software that is delivered electronically and computer software that is delivered by the "load and leave" method where the vendor or its agent loads the software at the user's location but does not transfer any tangible personal property containing the software to the user are also exempt from taxation. Computer software that constitutes digital music, digital books, digital videos, and digital games are taxable tangible personal property, regardless of the method by which the title, possession, or right to use such software is transferred to the user. (Ch. 340 (H.B. 598), Laws 2014, effective July 1, 2014; Statement of Purpose/Fiscal Note for H.B. 598, submitted by Rep. Mike Moyle)

(05/30/2014)

A subcontractor to a general contractor constructing real property pursuant to a contract with a state agency was liable for Idaho use tax on the materials it installed on the project. Even though the materials had been purchased by the state agency directly and no sales or use tax was paid, the contractor is deemed the consumer of the materials and owes the use tax on the purchase price of the materials incorporated into real property of an exempt entity. The subcontractor argued that the general contractor was responsible for the tax because the general contractor entered into the contract with the owner and took possession of the materials prior to the subcontractor’s work on the project. The Idaho State Tax Commission stated that multiple parties could be held liable for a tax and the fact that the general contractor could have also been liable for the tax did not change the taxpayer's use tax liability it incurred when it exercised power over the materials in fulfilling its obligations as a subcontractor. (Decision No. 24442, Idaho State Tax Commission, August 1, 2013)

(04/11/2014)

Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)

(01/28/2014)

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