Internet Tax Freedom Law Threatens State Taxes on E-Commerce

The federal Internet Tax Freedom Act looms over state efforts to tax digital goods and services, leaving revenue agencies and business interests with little choice but to sort out their differences in court.

State tax administrators, academics, and attorneys representing tech companies disagreed over the intent, meaning, and contemporary purpose of the 25-year-old tax preemption law during a panel discussion Tuesday hosted by the Multistate Tax Commission’s digital products work group.

The meeting was designed to guide the work group on state tax structures that avoid conflicts and litigation under ITFA, which prohibits states and localities from imposing discriminatory ...