Judiciary Committee Approves Smith’s Digital Goods and Services Tax Fairness Act

The House Judiciary Committee Wednesday approved the Digital Goods and Services Tax Fairness Act of 2015 (H.R. 1643), by a voice vote.

The Digital Goods and Services Tax Fairness Act of 2015 is a widely supported measure that prevents multiple taxation of digital goods by setting sourcing rules for the purchase of digital goods and services to prevent multiple taxation. As such, it helps implement the Permanent Internet Tax Freedom Act’s ban on multiple taxes of Internet commerce. The legislation also bars discriminatory taxation of digital goods and services.

In our modern economy, more and more consumers are buying digital goods and services rather than tangible items. Consumers shouldn’t be punished with higher taxes simply because they purchase an e-book instead of a paperback, or download an MP3 instead of purchasing a CD. The Digital Goods and Services Tax Fairness Act of 2015 protects consumers from unfair and duplicative taxes on digital goods. This is the kind of 21st century legislation we need if we want to promote tax fairness and ensure that consumers are not discouraged from purchasing digital goods.

Chairman Goodlatte applauded the Committee’s passage of the legislation:

“I applaud the Committee’s approval of this very important legislation to address the issue of taxing digital goods and services that are now a major part of our nation’s marketplace. A bipartisan group of Judiciary Committee members have come together to level the playing field for the taxpayers. In today's growing digital economy it is critical that there be clear rules of the road to protect consumers from multiple taxation. The passage of this bill ensures this important sector of our economy can continue to grow unimpeded by the spectre of unfair multiple-taxation.”

I introduced the bipartisan legislation earlier this year alongside Congressman Steve Cohen (D-Tenn.). Representatives Steve Chabot (OH-01), Trent Franks (AZ-09), and Blake Farenthold (TX-27) also cosponsored this legislation. Companion legislation was introduced in the Senate by Senators John Thune (R-S.D.) and Ron Wyden (D-Ore.).

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