118 STAT. 2616 PUBLIC LAW 108–435—DEC. 3, 2004 term ‘Internet access service’ does not include telecommuni cations services, except to the extent such services are pur chased, used, or sold by a provider of Internet access to provide Internet access.’’. (2) INTERNET ACCESS.—Section 1104(5) of that Act is amended by striking the second sentence and inserting ‘‘The term ‘Internet access’ does not include telecommunications serv ices, except to the extent such services are purchased, used, or sold by a provider of Internet access to provide Internet access.’’. SEC. 3. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS. The Internet Tax Freedom Act (47 U.S.C. 151 note) is amended— (1) by redesignating section 1104 as section 1105; and (2) by inserting after section 1103 the following: ‘‘SEC. 1104. GRANDFATHERING OF STATES THAT TAX INTERNET ACCESS. ‘‘(a) PRE OCTOBER 1998 TAXES.— ‘‘(1) IN GENERAL.—Section 1101(a) does not apply to a tax on Internet access that was generally imposed and actually enforced prior to October 1, 1998, if, before that date— ‘‘(A) the tax was authorized by statute; and ‘‘(B) either— ‘‘(i) a provider of Internet access services had a reasonable opportunity to know, by virtue of a rule or other public proclamation made by the appropriate administrative agency of the State or political subdivi sion thereof, that such agency has interpreted and applied such tax to Internet access services; or ‘‘(ii) a State or political subdivision thereof generally collected such tax on charges for Internet access. ‘‘(2) TERMINATION.— ‘‘(A) IN GENERAL.—Except as provided in subparagraph (B), this subsection shall not apply after November 1, 2007. ‘‘(B) STATE TELECOMMUNICATIONS SERVICE TAX.— ‘‘(i) DATE FOR TERMINATION.—This subsection shall not apply after November 1, 2006, with respect to a State telecommunications service tax described in clause (ii). ‘‘(ii) DESCRIPTION OF TAX.—A State telecommuni cations service tax referred to in subclause (i) is a State tax— ‘‘(I) enacted by State law on or after October 1, 1991, and imposing a tax on telecommunications service; and ‘‘(II) applied to Internet access through administrative code or regulation issued on or after December 1, 2002.’’. ‘‘(b) PRE NOVEMBER 2003 TAXES.— ‘‘(1) IN GENERAL.—Section 1101(a) does not apply to a tax on Internet access that was generally imposed and actually enforced as of November 1, 2003, if, as of that date, the tax was authorized by statute and— ‘‘(A) a provider of Internet access services had a reason able opportunity to know by virtue of a public rule or other public proclamation made by the appropriate 47 USC 151 note. 47 USC 151 note.
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