Yesterday President Bush signed into law HR 3678, the Internet Tax Freedom Act Amendments Act of 2007. Thus the law now provides that “[n]o State or political subdivision thereof may impose any of the following taxes during the period beginning November 1, 2003, and ending November 1, 2014: (1) Taxes on Internet access and (2) Multiple or discriminatory taxes on electronic commerce.” Certain grandfathering provisions applicable to states that tax Internet access were similarly extended until November 1, 2014.
An article in today’s New York Times highlights a federal court injunction entered earlier this month, pursuant to the Internal Revenue Code, against entities that operate a website accused of posting apparently self-authored materials advising that federal income and employment taxes are voluntary, instructing how to illegally avoid paying taxes, and providing necessary supplies.
The court rejected defendants’ First Amendment contentions, explaining that while the defendants “are free to give speeches on whether the Sixteenth Amendment was properly ratified,” their conduct here went beyond same and is enjoinable. Whether defendants’ speech at issue is considered commercial (“the government may prohibit false, misleading or deceptive commercial speech, or speech that promotes unlawful conduct”) or political (“[t]he First Amendment does not protect speech that incites imminent lawless action”), the court ruled that the First Amendment did not provide a defense.
I note that the website was not actually ordered “to close.” Instead defendants were directed, among other things, to:
“remove from their websites and all other websites over which they have control, all tax-fraud scheme promotional materials, false commercial speech concerning the internal revenue laws, and speech likely to incite others imminently to violate the internal revenue laws,” and
“remove from its websites all abusive tax shelter promotional materials, false commercial speech, and materials designed to incite others to violate the law (including tax laws), and, for a period of one year from the date of this Memorandum, Decision & Order, display prominently on the first page of the website an attachment of this Memorandum, Decision and Order.”
Thank you to my partner Ron Teeple for bringing this article to my attention.