Indiana recently passed emergency legislation that prohibits state and local governments from taxing Internet access or the use of Internet access. The legislation is effective April 23, 2015. The legislation prohibits any taxation, whether on a provider or buyer of Internet access. This includes retail tax, sales or use tax, any charge that generates government revenue. However, existing utility, communications, and telecommunications fees are not considered a tax under the legislation. 

“Internet access” includes purchase, use, or sale of communications services, including telecommunications, by an Internet access provider as long as those services are purchased, used, or sold to provide Internet access or to allow users to access Internet content. It also includes services that are part and parcel of providing Internet access or given to users as part of access, like a home page, e-mail, instant messaging, or video clips. “Internet access” does not include voice, audio, or video programming.

The Indiana legislation mirrors the federal prohibition on taxing Internet access under the Internet Tax Freedom Act, which expires Oct. 1, 2015.