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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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By FITCamaro on 10/26/2007 9:19:16 PM , Rating: 2
No. You have to make over a certain amount before you have to pay taxes on it. I think you have to pay taxes on any sales over $10,000 or so. You also have to pay taxes on sales if it accounts for over a certain percentage of your annual income.

So if you sell a lot of cheap items but you make $40,000 a year from the profits, thats obviously income and you have to pay income tax.


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