Coming next week: A tax on your e-mail?

Editor's note: Click here for Friday's update on the Senate's Internet access tax vote.

When the U.S. House of Representatives overwhelmingly passed a bill last week extending a ban on Internet access taxes, it may have opened up the possibility of previously forbidden taxes on paid e-mail and other Web services.

That's what a Congressional Research Service attorney concluded in a two-page memorandum (click here for a PDF) released on Thursday by Sen. Ron Wyden (D-Ore.), the author of the original tax ban in 1998. The CRS is a federally funded sort of "think tank" charged with conducting nonpartisan reports and analysis for Congress.

The specter of an e-mail tax all comes down to how the bills define what the ban covers.

Current law, which is set to expire on November 1 unless Congress acts, defines the term as "a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information and other services as part of a package of services offered to users."

By contrast, the language approved by the House recently, which will potentially be considered soon by the Senate, is narrower, the CRS said. It includes e-mail and other services in the tax ban, but only if they're "incidental" to the Internet connection services that a company already provides.

That means, by the CRS' analysis, that if I'm a Verizon broadband subscriber but opt to get my e-mail service through, say, Yahoo's premium offering, the e-mail service is potentially taxable because it's not directly offered by the provider of my Internet connection.

"I know no member of the U.S. Senate who wishes to see that happen," Wyden said in a speech on the Senate floor Thursday afternoon.

He urged the politicians to take up a bill he sponsored earlier this year, which would permanently ban Internet taxes and keep the same definitions. Under that law, "the Internet has thrived and prospered," and states have not lost significant tax revenue, he argued.

With the current law's expiration date fast approaching, the Senate is still wrestling with how to proceed with consideration of the Internet tax ban proposals, weeks after the Senate Commerce Committee called off a vote on a four-year extension.

Sen. John Sununu (R-N.H.) on Wednesday made another push for a permanent tax ban, in the form of an amendment to an Amtrak funding bill. Sens. Frank Lautenberg (D-N.J.) and Tom Carper (D-Del.) immediately countered with an amendment that would limit the ban to a four-year extension.

Both amendments rely on the House-approved definition of Internet access, however, so it wasn't immediately clear how or if the senators plan to deal with the e-mail tax issue raised by Wyden and the CRS. Sununu did say, however, that he would "like to see the clearest possible language when it comes to service providers that are providing different kinds of Internet services but may not be providing Internet access services as well."

Sununu has requested a procedural vote for Friday morning on whether to end debate on his amendment and move directly to a vote on its passage. But Carper suggested on the Senate floor Thursday that the senators hold off until next week and hold up-or-down votes on Sununu's permanent ban proposal and the competing six-year extension bill. Carper and a handful of other senators, mostly Democrats, openly favor a temporary ban so that states can revisit the need to find new revenue sources in the face of changing technology.

Stay tuned to CNET News.com as we continue to track the jockeying in the countdown to the ban's scheduled expiration next week.

[rcrusoe]

Now THAT would help cut down on spam

If the feds start taxing email a lot of people will just quit using it.

SMS and IM are already more popular with a lot of people.

[tremorfireheart]

other services

well it specifically states email to be taxable except in certain conditions but in that bill and right next to it is the phrase "other services." Other services could very well include those sms, iming, blog hosting and posting, forum posting etc. a tax on everytime you upload or download a video from youtube, msn, or aol. We are already taxed on when we buy an internet game, when we subscribe to the services, and now possibly every time we log on? lets extend the ban as it currently stands and or make it permament.
=^-^= [e-mail]

[oregonnerd]

tax on e-mail (etc)

Well, that would be a good way of supplying a true line between middle class and lower class (I qualify for the latter on the basis of income). Perhaps everything except necessties should have an additional tax...or perhaps the necessities as well. That would get rid of those bothersome lower-class people, who are always malcontents anyway.
--Glenn

[protagonistic]

RE: Coming next week: a tax on your e-mail?

Actually, who really cares. If they start taxing email the only
people who would be paying such a tax would be those who are
too computer illiterate to realize that there are other ways to
transfer files. But of course that would include the very people in
Congress that allowed this to happen in the first place. :-)

[WJeansonne]

Stupid A** Democrats!

That's all the can do is sit around and dream up new taxes for Americans. My god, just how stupid do you have to be to vote for one! Our new stupid governor here in Maryland is already the most unpopular in the 50 states, since running up a two billion deficit (it was a 1 billion surplus under governor Erhlich). These miserable low lifes need to be ousted from office for good!

[Pikachu62]

HuH??

The way I read it, the democratic representative was lobbying to extend the BAN on such taxes...
NOT "dreaming up new taxes..."

[GeekRex]

Typical Neo-Con Republican

...and you probably got a big ole tax break from this murderous pig W too didn't you? This type of knee-jerk responses to the work tax is so typical of you neo-cons. Whatever happened to pay as you go? At least I wasn't stupid enough to vote for this murderous, corrupt, bankrupting group that has led the US of A down the rathole for the last 10 years.
This is a stupid tax--end of discussion. It is simply moronic. But to lump all taxes together like this person does shows even less intelligence--maybe on the level of a slug?

[blueyes123]

Gotta love the democrats?

These folks who "claim to be for the people can't ever pass up a new tax or increasing a current one. They never met one they didn't like. Eventually when haggard hillary gets in, they take it all and give us a socialized living allowance. One paycheck fits all. Of course the foreign workers they are hell bent in giving amnesty to will receive a larger paycheck because "they need it!"

[GeekRex]

Wake up and smell the $$$

Apparently you weren't watching the recent debate. When Hillary was asked if she favored lifting the cap on the Social Security tax, which would overwhelmingly fix the SS System, she REFUSED to answer. REFUSED!?!?! How do you do that at a debate? Who do you think she is protecting? It certainly isn't the vast middle-class of America!! She is protecting the rich and powerful. So get your head out of the sand and stop whining about socialization. You'd better worry about revolution if the current crowd continues in power. I already know some peole with their fingers on their triggers.

[imacpwr]

Impossible to implement internationally

They might be able to apply a tax on domestic email traffic but
what about email coming from outside of the USA..? There's no way
the American government is going to get every country in the
world to jump on board with email taxation.

[chash360]

Senator on his toes

Ron Wyden has done his homework. The internet has thrived under a Tax ban, again proving that something given away for free, can have infinite, unlimited value.

Do not ever let them tax it, it is the last vestige of free speech, do not let them tax it!!!