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Glossary of Terms

The Advisory Commission on Electronic Commerce (ACEC):

The ACEC was created by Congress under the Internet Freedom Act. The commission, headed by anti-Internet tax supporter Governor James Gilmore III (R-VA) was composed of three federal, eight private, eight state and local government representatives. Tasked with producing what is arguably the most important policy initiative of the information age: recommendations on electronic commerce and tax policy, critical issues with global implications, the commission sent a report to Congress on April 12, 2000, but failed to reach the required supermajority (two-thirds) to make findings and make recommendations.

Internet Tax Freedom Act:

Authored by Congressman Christopher Cox (R-CA) and Senator Ron Wyden (D-OR), the act imposed a three-year moratorium on against new taxes on Internet access fees (for ISP providers such as MSN or AOL) and further discretionary taxation of the Internet. The moratorium will expire October 21, 2001.

National Sales Tax Collection Center:

Proposed under the Streamlined Sales Tax Project (SSTP), the collection center would be responsible for monitoring and collecting consumer online shopping information, such as purchases, credit cards, names and addresses. The center would use this compiled information to issue an Internet sales tax bill. No cost information is available for the creation of this new body.


Also called a physical presence (sales force, warehouse, or offices)it is the requirement that a retailer must meet in a consumer’s state to be in order to be required by that state to collect and remit sales taxes.

Quill v. North Dakota:

Decision made in 1992 by the U.S. Supreme Court said states cannot require retailers without a physical presence in that state to collect sales taxes. In this case, the consumer still has the legal responsibility to pay the use tax directly to his or her own state. The case cited Congress’ authority to legislate in this area.

Sales tax:

Sales tax is a levy on gross receipts from retail sales of products and services. It is calculated as a percentage of the sales price on a good or service purchased from a business that has a nexus, or physical presence, in the same state as the consumer.

Streamlined Sales Tax Project:

An effort by states to “simplify” sales and use tax system. Under SSTP a “streamlined” system has been proposed that flattens tax rates, resulting in a de facto national sales tax and creates a national sales tax collection center.

Use tax:

A use tax is a self-imposed levy on the use or consumption of a taxable product or service purchased from an out-of-state vendor. Consumers, in most states, are expected to keep track of all of their out-of-state purchases over the course of a tax year and report these purchases to their taxing authority and pay the appropriate use or usage tax.

Value-Added Tax:

Common name in the international community for a levy placed on a good or service. The tax varies depending on country and type of industry and is typically added at the time of the transaction.

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