Costly Internet Tax Could Be On The Horizon

Web users will face billions of dollars in new taxes if Congress allows a ban on Internet taxes to expire in December.

The Internet Tax Freedom Act prevents state and local governments from taxing Internet use and has been reauthorized every three years since 1998. If it is not reauthorized in December, consumers and businesses could face $14.7 billion in new taxes, according to a new American Action Forum report.

Extension of the ban has wide support in Congress; but this time, it could be linked to a much more controversial bill—the Marketplace Fairness Act, which would allow states to collect a sales tax on Internet goods sold in the state by companies located online or outside of the state.