article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Internet Fairness and Interstate Responsibility Act'' or ``Net FAIR Act''. SEC. 2. FINDINGS. Congress makes the following findings: (1) By exercising its authority under article I, section 8, clause 3 of the United States Constitution, Congress may best achieve a consistent and coherent national policy regarding regulation and taxation of Internet activity and the concomitant uniformity, simplicity, and fairness that is needed to avoid burdening this evolving form of interstate and foreign commerce. (2) Because the Federal Government and State and local governments will have numerous reasons to interact over the Internet with the individuals and companies that use it, a lexicon of terms relating to the Internet and its use is vital. (3) A limited number of States have already adopted by law or regulation various forms of taxes that apply to commercial activity that are unique to the Internet or to providers of Internet services. (4) There are approximately 30,000 separate taxing jurisdictions in the United States, thus presenting the potential for an enormous variety of taxes and tax rates on Internet activity. (5) The unique character of the Internet transcends physical and political boundaries and permits commercial and intellectual communications to move from city to city, State to State, and nation to nation without any set path in a manner that is virtually unparalleled in history. (6) The Internet is a global network that offers the potential for entrepreneurial individuals and small businesses throughout the United States to reach customers and markets throughout the world with their products and services. (7) The United States must create an example for the rest of the world by preventing discriminatory taxation on Internet activities so that the United States can persuade our trading partners to resist the temptation to tax such activities and thereby limit the potential growth of such activities. (8) The innovation and creativity that has helped computer technology evolve into the present-day Internet has thrived in a tax-free environment and should be granted protection from local, State, and Federal taxation in order to permit this new medium to reach its fullest potential. (9) The President should seek bilateral and multilateral agreements through the World Trade Organization, the Organization for Economic Cooperation and Development, the Asia Pacific Economic Cooperation Council, and other appropriate international organizations and fora to establish that commercial transactions using the Internet are free from tariff and discriminatory taxation. SEC. 3. MORATORIUM ON IMPOSITION OF TAXES ON INTERNET AND INTERNET- RELATED COMPUTER SERVICES. (a) Moratorium.--Except as otherwise provided in this section, no State or political subdivision thereof may impose, assess, or attempt to collect a tax directly or indirectly on-- (1) the Internet or Internet-related services; or (2) the use of the Internet or Internet-related services. (b) Preservation of State and Local Taxing Authority.--Subsection (a)-- (1) does not apply to taxes imposed on or measured by net income derived from the Internet or Internet-related services if such taxes are applied uniformly to all businesses; (2) does not apply to fairly apportioned business license taxes applied to businesses having a business location in the taxing jurisdiction if such taxes are applied uniformly to all businesses; (3) does not affect the authority of a State or political subdivision to impose a sales or use tax on sales or other transactions effected by use of the Internet or Internet-related services if-- (A) the tax is the same as the tax generally imposed and collected by that State or political subdivision thereof on sales or transactions effected by mail order, telephone, or other remote means within its taxing jurisdiction; and (B) the obligation to collect the tax from sales or other transactions effected by use of the Internet or Internet-related services is imposed on the same person or entity as in the case of sales or transactions affected by mail order, telephone, or other remote means; and (4) does not apply to taxes on real or personal property used in connection with the providing of Internet or Internet- related services if such taxes are applied to all businesses using real or personal property in connection with their businesses. (c) Termination.--The moratorium set forth under subsection (a) shall terminate on December 31, 2001. SEC. 4. COMMISSION ON INTERNET TAXATION AND REGULATION. (a) Establishment.-- (1) In general.--There is established a commission to be known as the Commission on Internet Taxation and Regulation (hereafter in this section referred to as the ``Commission''). (2) Membership.--The Commission shall be composed of 15 members of whom-- (A) one shall be the Secretary of Commerce; (B) one shall be the Secretary of State; (C) one shall be the Secretary of the Treasury; and (D) twelve shall be appointed by the President without regard to political affiliation, of whom-- (i) three shall be the chief executive officer of a State (including at least one who is the chief executive officer of a State that does not impose a sales tax); (ii) three shall be the chief executive officer of a political subdivision of a State (including at least one who is the chief executive officer of a political subdivision that does not impose a sales tax); (iii) three shall be individuals employed by or affiliated with companies engaged in computer manufacturing activities, software activities, or activities relating to the Internet or the provision of Internet-related services; and (iv) three shall be individuals employed by or affiliated with companies engaged in electronic commerce (including at least one who is employed by or affiliated with a company engaged in mail order commerce). (3) Period of appointment; vacancies.--Members shall be appointed for the life of the Commission. Any vacancy in the Commission shall not affect its powers, but shall be filled in the same manner as the original appointment. (4) Chairman and vice chairman.--The Commission shall select a Chairman and Vice Chairman from among its members. (5) Meetings.--The Commission shall meet at the call of the Chairman. (6) Quorum.--A majority of the members of the Commission shall constitute a quorum, but a lesser number of members may hold hearings. (b) Duties.-- (1) In general.--The Commission shall have as its duties the following: (A) To conduct a thorough study of taxation and regulation of the Internet and Internet-related services under State and local law and identify any inconsistencies in such taxation or regulation. (B) To consider the effect of current Federal statutes and regulations on the Internet and Internet- related services and recommend appropriate modifications of such statutes and regulations. (C) To propose model legislation (a so-called ``Uniform Internet Commercial Code'') relating to commercial transactions on the Internet and to Internet-related services in order to facilitate uniform treatment of such transactions and such services under Federal law and State law. (2) Model legislation.--The model legislation under paragraph (1)(C) shall-- (A) provide terminology applicable to commercial transactions on the Internet and to Internet-related services; (B) define the transactions, services, and other activities covered by the legislation; and (C) establish regulatory structures and mechanisms applicable to such transactions, services, and other activities. (3) Adoption of positions.--The Commission may not adopt a position with respect to a matter under this subsection unless the position is approved by at least 10 members of the Commission. (c) Report.--Not later than December 31, 2000, the Commission shall submit to Congress and the President a report on its activities under this section. The report shall-- (1) set forth the findings of the Commission under subsection (b)(1)(A); (2) set forth any findings of the Commission under subsection (b)(1)(B), including any recommendations relating to such findings; (3) set forth the model legislation proposed under subsection (b)(1)(C); and (4) include any additional findings and recommendations that the Commission considers appropriate. (d) Powers of Commission.-- (1) Hearings.--The Commission may hold such hearings, sit and act at such times and places, take such testimony, and receive such evidence as the Commission considers advisable to carry out the purposes of this section. (2) Information from federal agencies.--The Commission may secure directly from any Federal department or agency such information as the Commission considers necessary to carry out the provisions of this section. Upon request of the Chairman of the Commission, the head of such department or agency shall furnish such information to the Commission. (3) Postal services.--The Commission may use the United States mails in the same manner and under the same conditions as other departments and agencies of the Federal Government. (4) Gifts.--The Commission may accept, use, and dispose of gifts or donations of services or property. (e) Commission Personnel Matters.-- (1) Compensation of members.--Each member of the Commission who is not an officer or employee of the Federal Government shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day (including travel time) during which such member is engaged in the performance of the duties of the Commission. All members of the Commission who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States. (2) Travel expenses.--The members of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Commission. (3) Staff.-- (A) In general.--The Chairman of the Commission may, without regard to the civil service laws and regulations, appoint and terminate an executive director and such other additional personnel as may be necessary to enable the Commission to perform its duties. The employment of an executive director shall be subject to confirmation by the Commission. (B) Compensation.--The Chairman of the Commission may fix the compensation of the executive director and other personnel without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates, except that the rate of pay for the executive director and other personnel may not exceed the rate payable for level V of the Executive Schedule under section 5316 of such title. (4) Detail of government employees.--Any Federal Government employee may be detailed to the Commission without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege. (5) Procurement of temporary and intermittent services.-- The Chairman of the Commission may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals which do not exceed the daily equivalent of the annual rate of basic pay prescribed for level V of the Executive Schedule under section 5316 of such title. (f) Termination.--The Commission shall terminate 90 days after the date on which the Commission submits its report under subsection (c). SEC. 5. DEFINITIONS. In this Act: (1) Internet.--The term ``Internet'' means the computer facilities and telecommunications facilities, and related equipment and software, comprising the interconnected world- wide network of computer networks that employ the Transmission Control Protocol/Internet Protocol, or any predecessor or successor protocol, to transmit information by wire or radio. (2) Internet-related services.--The term ``Internet-related services'' includes the following: (A) Internet access services, including the storage, processing, and transmission of information that enables an individual to make use of the resources found via the Internet. (B) Online services, including the information, information processing, electronic commerce, and other services available to an individual as part of a package of services that are combined with Internet access service and offered to the user for a single price. (3) Tax.--The term ``tax'' includes any tax, license, or fee that is imposed by any governmental entity, and includes the imposition on the seller of an obligation to collect and remit a tax imposed on the buyer.
summary: Internet Fairness and Interstate Responsibility Act or Net FAIR Act - Prohibits a State or political subdivision thereof from imposing, assessing, or attempting to collect any tax on the Internet or Internet-related services or on their use. Preserves State and local taxing authority with respect to income, license, and sales or use taxes. Terminates such prohibition on December 31, 2001. Establishes the Commission on Internet Taxation and Regulation to: (1) study the taxation and regulation of the Internet and Internet-related services under State and local law and identify any inconsistencies; (2) recommend appropriate modification to current Federal and State statutes concerning such services; (3) propose model legislation relating to commercial transactions on the Internet in order to facilitate their uniform treatment under Federal and State law; and (4) report to the Congress and the President.