South Carolina General Assembly
113th Session, 1999-2000

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Bill 3061


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Bill Number:                      3061
Type of Legislation:              General Bill GB
Introducing Body:                 House
Introduced Date:                  19990112
Primary Sponsor:                  Kirsh
All Sponsors:                     Kirsh, Cato, Davenport
Drafted Document Number:          l:\council\bills\kgh\15084htc99.doc
Residing Body:                    House
Current Committee:                Ways and Means Committee 30 HWM
Subject:                          Commerce on Internet or interactive 
                                  computer services; tax policy against 
                                  interference; Taxation


                        History

Body    Date      Action Description                     Com     Leg Involved
______  ________  ______________________________________ _______ ____________
House   19990112  Introduced, read first time,           30 HWM
                  referred to Committee
House   19981209  Prefiled, referred to Committee        30 HWM


                             Versions of This Bill

View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-2-80, ENACTING THE SOUTH CAROLINA INTERNET TAX FREEDOM ACT, SO AS TO PROHIBIT THE STATE OR POLITICAL SUBDIVISION FROM IMPOSING A TAX OR FEE ON THE INTERNET OR INTERACTIVE COMPUTER SERVICES, AND TO PROVIDE DEFINITIONS AND EXCEPTIONS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. This act may be cited as the Internet Tax Freedom Act.

SECTION 2. The General Assembly finds:

(1) As a massive global network spanning not only state but international borders, the Internet is inherently a matter of interstate and foreign commerce within the jurisdiction of the United States Congress under Article I, Section 8 of the United States Constitution.

(2) Even within the United States, the Internet does not respect state lines and operates independently of state boundaries. Addresses on the Internet are designed to be geographically indifferent. Internet transmissions are insensitive to physical distance and can have multiple geographical addresses.

(3) Because transmissions over the Internet are made through packet-switching, it is impossible to determine with any degree of certainty the precise geographic route or endpoints of specific Internet transmissions and infeasible to separate intrastate from interstate and domestic from foreign Internet transmissions.

(4) Inconsistent and unadministrable taxes imposed on Internet activity by state and local governments threaten not only to subject consumers, businesses, and other users engaged in interstate and foreign commerce to multiple, confusing, and burdensome taxation, but also to restrict the growth and continued technological maturation of the Internet itself and to call into question the continued viability of this dynamic medium.

(5) Because the tax laws and regulations of so many jurisdictions were established before the Internet or interactive computer services, their application to this new medium in unintended and unpredictable ways threatens every Internet user, access provider, vendor, and interactive computer service provider.

(6) The electronic marketplace of services, products, and ideas available through the Internet or interactive computer services can be especially beneficial to senior citizens, the physically challenged, citizens in rural areas, and small businesses. It also offers a variety of uses and benefits for educational institutions and charitable organizations.

(7) Consumers, businesses, and others engaging in interstate and foreign commerce through the Internet or interactive computer services could become subject to more than thirty thousand separate taxing jurisdictions in the United States alone.

(8) The consistent and coherent national policy regarding taxation of Internet activity that is needed to avoid burdening this evolving form of interstate and foreign commerce can best be achieved by the State prohibiting Internet taxes and fees except as provided in Section 12-2-80 of the 1976 Code as added by this act.

SECTION 3. Chapter 2, Title 12 of the 1976 Code is amended by adding:

"Section 12-2-80. (A) Except as otherwise provided in this section, neither this State nor any political subdivision of this State may impose, assess, or attempt to collect any tax or fee directly or indirectly on:

(1) the Internet or interactive computer services; or

(2) the use of the Internet or interactive computer services.

(B) Subsection (A):

(1) does not apply to state income taxes imposed on and measured by net income derived from the Internet or interactive computer services;

(2) does not apply to fairly apportioned business license taxes applied to businesses that have a business location in counties and municipalities; and

(3) does not affect the authority of this State to impose a sales or use tax on sales or other transactions effected by use of the Internet or interactive computer services if:

(a) the tax is the same as the tax imposed and collected by this State or on sales or interstate 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 interactive computer services is imposed on the same person or entity as in the case of sales or transactions effected by mail order, telephone, or other remote means.

(C) As used in this section:

(1) 'Internet; Interactive Computer Service' have the meaning given such terms by paragraphs (1) and (2), respectively, of section 230(e) of the Communications Act of 1934 (47 U.S.C. 230(e)).

(2) 'Tax' means any tax, license, or fee that is imposed by any governmental entity and the imposition on the seller of an obligation to collect and remit a tax imposed on the buyer."

SECTION 4. This act takes effect upon approval by the Governor.

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