Letter to the Honorable Bernie Sanders, contained in Section 922 of the conference report for H.R. 644, the Trade Facilitation and Trade Enforcement Act of 2015
Section 922 would make permanent an existing moratorium on the ability of state and local governments to impose taxes on Internet access or on certain electronic commerce. That prohibition on taxation, which expires on October 1, 2016, under current law, is an intergovernmental mandate as defined in the Unfunded Mandates Reform Act (UMRA). Section 922 also would extend the ability of state and local governments that had been collecting such taxes prior to October 1, 1998, to continue collecting such taxes, but only through June 2020. (Those governments are commonly referred to as the grandfathered states.)
Beginning in July 2020, the grandfathered states would lose their ability to collect such taxes, and CBO estimates that the cost of the mandate (falling primarily on those states) would then increase significantly and probably would total more than $100 million in the final three months of fiscal year 2020 (July through September). The cost of the mandate would total more than several hundred million dollars annually thereafter, CBO estimates. (The threshold established in UMRA for intergovernmental mandates is $77 million in 2016 and would total $84 million in 2020, with adjustments for inflation.)
CBO did not review other provisions of the conference language for intergovernmental or private sector mandates. UMRA requires CBO to review only bills reported from authorizing committees (Section 424 of the Budget Control Act).