The Direct Marketing Association (DMA) has been a vigorous advocate for making the Internet tax moratorium permanent. But in order to prevent states and localities from enacting burdensome taxes, it was crucial that legislation pass before the previous moratorium expired on November 1, 2007.

While legislation to make the moratorium permanent received wide-spread bipartisan support, the seven-year extension was the result of a compromise between Senator John Sununu (R-NH), who favored a permanent moratorium, and Senator Thomas Carper (D-DE), who had filed an amendment to grant a four-year extension.

Although the House had previously passed a bill providing for a four-year extension, it voted unanimously to send the Senate bill to the President, who signed it into law.

Pointing to the enormous — and growing — impact of the Internet on US commerce and the marketing community, DMA continues to emphasize in its policy work in Washington, DC and the states, that keeping the Internet free of unnecessary, burdensome taxes is absolutely crucial to the Internet’s continued growth and economic viability.

Now that access to the Internet will remain tax-free for the next seven years, the legislative battle will next focus on the appropriateness of mandating sales tax collection responsibilities on companies that do not have a physical presence in a taxing state.

DMA has been an outspoken critic of enforcing collection of sales tax on out-of-state marketers — those without a physical presence or "tax nexus" in the customer’s state — particularly opposing the Streamlined Sales and Use Tax Agreement (SSUTA) compact.

Testifying in Florida, DMA Vice President for Government Affairs Mark Micali declared, "This agreement is anything but streamlined or simplified, as it neither reduces the 7,600 tax jurisdictions in the US, nor the number of state and local sales tax rates, nor the number of audits to which an interstate seller would be subject."

Additionally, DMA has challenged New York Governor Eliot Spitzer’s second attempt to require out-of-state marketers to begin collecting sales tax on deliveries made into the Empire State based merely on a link to the marketer’s website. The governor previously proposed such collection during the 2007 holiday shopping season, a vitally important time for US businesses and the economy. But he withdrew the proposal after negative responses from DMA and the marketing community.

Armed with the US Supreme Court’s 1992 Quill Corp. v. North Dakota decision that, absent Congressional approval, states cannot impose sales tax collection duties on out-of-state companies without a physical presence or "tax nexus" in the taxing state, DMA will continue to challenge attempts to impose burdensome tax collection schemes that threaten the growth of the Internet and its value to marketers.

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