States Must Stop Taxing Internet Access Services Beginning in July

Jun 1st, 2020

Effective July 1, 2020, states that currently impose sales tax on internet access services will no longer be allowed to do so. This is because a grandfather clause that allows certain states to tax internet access services will expire on June 30, 2020.

The Internet Tax Freedom Act (ITFA) was passed by Congress in 1998 to prohibit the taxation of internet access services. However, ITFA included a grandfather clause allowing certain states to continue taxing internet access services. The states that currently tax internet access services under this clause include Hawaii, New Mexico, Ohio, South Dakota, Texas, and Wisconsin. As soon as the grandfather clause expires, internet access services will no longer be taxable in these states.

Note that it will still be possible for tax to apply to internet access services that are bundled with other taxable products or services.