House panel OKs bill to ban multiple taxation of online purchases

The House Judiciary Committee advanced the Digital Goods and Services Tax Fairness Act of 2015 last week, approving the measure by a voice vote.

The Digital Goods and Services Tax Fairness Act is designed to prevent multiple taxation of digital goods by establishing sourcing rules governing the purchase of such goods and services. In doing so, the proposed bill helps implement the ban on multiple taxes in Internet commerce via the Internet Tax Freedom Act. The legislation also bars any type of discriminatory taxation of digital goods and services.

“In our modern economy, more and more consumers are buying digital goods and services rather than tangible items,” U.S. Rep. Lamar Smith (R-TX), former House Judiciary Committee chairman, said. “Consumers shouldn’t be punished with higher taxes simply because they purchase an e-book instead of a paperback, or download an MP3 instead of purchasing a CD.

“The Digital Goods and Services Tax Fairness Act protects consumers from unfair and duplicative taxes on digital goods,” Smith said. “This is the kind of 21st century legislation we need if we want to promote tax fairness and ensure that consumers are not discouraged from purchasing digital goods.”

Rep. Bob Goodlatte (R-VA), current Judiciary Committee chairman, was pleased with his committee’s advancing the legislation, as well as Smith’s leadership in the endeavor.

“I applaud the committee’s approval of this very important legislation to address the issue of taxing digital goods and services that are now a major part of our nation’s marketplace,” Goodlatte said. “A bipartisan group of Judiciary Committee members has come together to level the playing field for the taxpayers. In today’s growing digital economy, it is critical that there be clear rules of the road to protect consumers from multiple taxation. The passage of this bill ensures this important sector of our economy can continue to grow unimpeded by the specter of unfair multiple taxation.”

The legislation was introduced earlier this year by Smith and Rep. Steve Cohen (D-TN). Reps. Steve Chabot (R-OH), Trent Franks (R-AZ) and Blake Farenthold (R-TX) are listed as co-sponsors. A companion bill was introduced in the Senate by Sens. John Thune (R-SD) and Ron Wyden (D-OR).