BILL NUMBER: SB 394	CHAPTERED  09/25/01

	CHAPTER  343
	FILED WITH SECRETARY OF STATE  SEPTEMBER 25, 2001
	APPROVED BY GOVERNOR  SEPTEMBER 24, 2001
	PASSED THE SENATE  SEPTEMBER 4, 2001
	PASSED THE ASSEMBLY  AUGUST 30, 2001
	AMENDED IN ASSEMBLY  AUGUST 23, 2001
	AMENDED IN ASSEMBLY  JULY 23, 2001
	AMENDED IN ASSEMBLY  JUNE 20, 2001
	AMENDED IN SENATE  MAY 1, 2001
	AMENDED IN SENATE  APRIL 24, 2001

INTRODUCED BY   Senator Sher
   (Principal coauthor:  Assembly Member John Campbell)
   (Coauthor:  Assembly Member Alquist)

                        FEBRUARY 21, 2001

   An act to amend and repeal Section 65004 of the Revenue and
Taxation Code, relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 394, Sher.  Internet Tax Freedom Act:  continuation.
   The California Internet Tax Freedom Act prohibits, with specified
exceptions, the imposition, assessment, or attempt to collect (1) a
tax on Internet access, Online Computer Services, or the use of the
Internet or Online Computer Services, (2) a bit or bandwidth tax, or
(3) any discriminatory tax on Online Computer Services or Internet
access.  This act provides that it is to become inoperative on
January 1, 2002.
   This bill instead would, on the basis of whether certain
conditions are met, provide that the act shall remain in effect only
until January 1 of either 2003 or 2004, and as of the applicable date
is repealed.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 65004 of the Revenue and Taxation Code is
amended to read:
   65004.  (a) Except as provided in subdivision (b), no city,
county, or city and county may impose, assess, or attempt to collect
any of the following:
   (1) A tax on Internet access, Online Computer Services, or the use
of Internet access or any Online Computer Services.
   (2) A bit tax or bandwidth tax.
   (3) Any discriminatory tax on Online Computer Services or Internet
access.
   (b) The prohibition in subdivision (a) against the imposition of
taxes shall not apply to any new or existing tax of general
application, including, but not limited to, any sales and use tax,
business license tax, or utility user tax that is imposed or assessed
in a uniform and nondiscriminatory manner without regard to whether
the activities or transactions taxed are conducted through the use of
the Internet, Internet access, or Online Computer Services.
   (c) A cable television franchise fee may not be imposed on Online
Computer Services or Internet access delivered over a cable
television system if the Federal Communications Commission, by
issuing a final order, or a court of competent jurisdiction, by
rendering a judgment enforceable in California, finds that those are
not cable services as defined in Section 522(6) of Title 47 of the
United States Code and are, therefore, not subject to a franchise
fee.  However, if that final order or judgment is overturned or
modified by further administrative, legislative, or judicial action,
that action shall control.  The operation of this subdivision may be
suspended by a contract between a cable television franchising
authority and a cable television operator.
   (d) This part shall remain in effect only until January 1, 2004,
and as of that date is repealed, provided that the interim report
required by Section 38066 is submitted to the Governor and the
Legislature on or before December 1, 2002.  If the interim report
required by Section 38066 is not submitted to the Governor and the
Legislature on or before December 1, 2002, this part shall remain in
effect only until January 1, 2003, and as of that date is repealed.