A federal judge has affirmed the legality of a tax paid previously by millions of Internet domain name registrants, clearing the way for the government to resume collecting a fee of $15 to $30 per address.
In April, U.S. District Judge Thomas Hogan struck down the tax on domain name registrations, finding it unconstitutional. But a month later, Congress retroactively approved the tax, in part to allocate $23 million toward the Clinton administration's Next Generation Internet project to build a higher-speed network for scientists and academics.
In a new ruling, Hogan dismissed a lawsuit challenging the tax filed by the American Internet Registrants Association.
"There is no dispute that Congress can impose a 30 percent tax on Internet registrations and renewals," Hogan wrote in a decision issued Friday. "There is further no dispute that it can authorize National Science Foundation, or its agent, to collect that tax.
"Therefore," he determined, "the tax is now legally imposed, and there are no grounds to enjoin either its collection or use by NSF, as directed by Congress."
William Bode, the attorney for the plaintiffs, said he will appeal the decision.
"It is very disappointing," he said today. "We have a lot of clients who are upset with the quality of the service provided by Network Solutions, yet they paid these fees which seemed disproportionate. We still think, correctly, that the fees exceed constitutional and statutory authority."
The country's official domain name registrar since 1995, Network Solutions has collected $100 every two years for each registration: $70 for the registration itself, plus $30 that was designated for a fund to improve the workings of the Internet. For a one year renewal, the total fee is $50.
The Net "infrastructure" fee has not been collected since April. About $56 million--not including interest--had been collected before it was suspended, according to Network Solutions.