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Congress and the House decided once more to not tax the Internet!

The U.S. Congress and Senate once again agreed to a bipartisan resolution that extends the Internet tax moratorium.

The highly debated issue saw strong support for keeping the Internet tax free from both those in the industry and from grass roots movements.  ISPs strongly opposed any sort of taxation as it would hurt their revenues by driving away customers.  Users, who joined movements such as the "Don't Tax Our Web Coalition," did not want to be taxed either, as taxation would likely mean higher service charges.

A tax moratorium was originally instituted in 1998 Internet Tax Freedom Act.  It was extended twice already, in 2001 and 2004, but has not been permanently passed into law.

The house and senate disagreed on the exact length to ban taxation.  The House passed a resolution calling for a four year ban.  The Senate wanted a seven year ban.  Both legislative bodies saw strong bipartisan support for some kind of ban, though.

Senator Ted Stevens (R-AK) was enthusiastic about the tax moratorium.  He elaborated:

"The Internet has provided a powerful economic boost to our nation,and has become an important everyday tool for millions of Americans.  By keeping Internet access tax-free and affordable,Congress can encourage Internet use for distance learning,telemedicine, commerce and other important services."

Sadly, the internet is not entirely tax free.  The IRS is pushing a proposal as part of this year's budget proposal to track user income made on sites such as eBay.  They plan to use this information to adjust people's income accordingly.

The proposal for extension of the 1998 Internet Tax Freedom Act will now go to a panel composed of House and Senate members which will iron out the differences between the House and Senate's passed proposals and submit a single proposal to the President.

Should the Internet be tax free?  The answer according to the public seems to be overwhelming yes. However, your income from private Internet sales soon will be taxable.


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RE: Awesome
By Spivonious on 10/26/2007 3:58:40 PM , Rating: 2
Actually, most states ask that you report your online sales so that you can pay your sales tax when filing your income tax return.


RE: Awesome
By Alexstarfire on 10/26/2007 7:36:18 PM , Rating: 2
Even if they do that doesn't mean you have to. It's like using the honor system. I personally think that if they do that then they HAVE to get rid of the fees and such that we pay to sell stuff on the internet, at least for places like eBay. I mean, I don't want to pay a fee to list my item, a fee for when it sells, a fee to transfer the money to my account, AND THEN pay income tax on it. That's just over the top. It's an either or thing, not both.

I prefer that they not tax the internet period. I'd also prefer if they didn't tax online income since most people already pay part of the income just to sell the stuff online.


RE: Awesome
By zombiexl on 10/26/2007 7:48:45 PM , Rating: 5
All of those fees are valid business expenses and would be subtracted from your income, just as the costs of the goods you sell would be subtracted from the selling price to detemine your bottom line income.

If you cant whip up a spreadsheet that does the calcs for you get quickbooks (starter edition is free) or something to track it. Honestly if you are selling enough that you would need to report it, you are running a business and should pay taxes.


RE: Awesome
By Ringold on 10/26/2007 8:58:59 PM , Rating: 2
quote:
I'd also prefer if they didn't tax online income since most people already pay part of the income just to sell the stuff online.


And brick and mortar is.. free? Rent is free? Labor to man the battle stations is free?

If anything places like Amazon, and especially online banks, have a big advantage.

In the long run, it's inevitable. Either we'll still have an income tax (boo!) and the IRS will devise some expensive method of tracking it or a national sales tax will be levied on it.

That said, I'd still root on any American's following in the legacy of moonshiners with an Internet Rebellion..


RE: Awesome
By drebo on 10/26/2007 9:44:59 PM , Rating: 2
quote:
If anything places like Amazon, and especially online banks, have a big advantage.


That may be, but the internet income tax debate is not about corporations and businesses that do business on the internet. They already have to pay taxes on all income they generate, whether from brick and mortar store sales or internet sales.

What the IRS wants is to make it so that companies like eBay and Amazon must report the sales for their users who sell things through them. Like Joe Blow, who works in a cubicle counting beans during the day, and at night maintains an eBay store selling thousands of dollars per year in baseball cards. Currently, Joe is supposed to report that income, but can't be penalized if he doesn't. The IRS wants to make it so that eBay has to report it for him (1099 forms, most likely).

Two completely different things here.


RE: Awesome
By Ringold on 10/27/2007 2:56:19 PM , Rating: 2
Aha, I misunderstood. Thank you.


RE: Awesome
By wordsworm on 10/26/2007 9:45:10 PM , Rating: 2
I wish I could've given you a plussy for that remark. The reason why the Internet is free right now is to give it a chance to grow and compete. Frankly, I think it's done well enough that they should consider laying some taxes down so that the 'brick and mortar' stores have an even playing field.


RE: Awesome
By Alexstarfire on 10/27/2007 12:57:04 AM , Rating: 2
Well let's see, a person on eBay (I'm assuming) has a house and an internet connection to pay for. I don't think just doing this out of a public library is much of an option.


"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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