President Signs Bill Making Internet Service Tax Ban Permanent

While federal law has long blocked most states from collecting taxes on Internet service, that prohibition has to be renewed every few years. But today President Obama signed into law a new piece of legislation that makes existing bans permanent, and puts an end date on Internet taxes for the few states that still collect them.

The Internet Tax Freedom Act was first passed back in 1998 with the intention of encouraging consumers to get online by not taxing access to things like dial-up or DSL Internet access. The legislation has never addressed the issue of collecting taxes for online purchases (more on that below).

In typically shortsighted D.C. fashion, the bill was structured so that it needed to be periodically renewed — a process it’s undergone five times in the years since.

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