Digital advertising tax

(a) In general Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter: 50B Artificial intelligence Sec. 5000E–1. Digital advertising revenue. 5000E–1. Digital advertising revenue (a) In general In addition to any other tax imposed under this title, there is hereby imposed on any covered taxpayer a tax equal to 5 percent of the amount of any digital advertising revenue received by such covered taxpayer during any taxable year which is derived from digital advertisements displayed to United States users. (b) Covered taxpayer (1) In general For purposes of this section, the term covered taxpayer means, with respect to any taxable year, any taxpayer for which— (A) (i) total revenue from sources within and without the United States during such taxable year exceeded $50,000,000,000, or (ii) total revenue from sources within the United States during such taxable year exceeded $1,000,000,000, and (B) digital advertising revenue during such taxable year which is derived from digital advertisements displayed to United States users exceeded $50,000,000. (2) Aggregation rules (A) In general All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414, shall be treated as 1 taxpayer for purposes of this subsection. (B) Inclusion of foreign corporations For purposes of subparagraph (A), in applying subsections (a) and (b) of section 52 to this paragraph, section 1563 shall be applied without regard to subsection (b)(2)(C) thereof. (c) Other definitions In this section— (1) Digital advertising revenue The term digital advertising revenue means gross revenue derived from, or directly related to, the sale of a digital advertising service. (2) Digital advertising service The term digital advertising service means a service, provided for a fee, to deliver an advertisement or promotional message to a user through a digital interface, including services such as— (A) placing, displaying, transmitting, serving, delivering, selecting, ranking, targeting, optimizing, or otherwise distributing such advertisement or promotional message, (B) selling, licensing, allocating, or auctioning digital advertising inventory, (C) operating an advertising exchange, demand-side platform, supply-side platform, advertising network, retail-media network, or substantially similar system to the extent consideration is attributable to the placement, auction, delivery, or distribution of such advertisement or promotional message, or (D) any other similar service for the placement or delivery of such advertisement or promotional message, as may be designated by the Secretary for purposes of this section. (3) Digital interface The term digital interface includes a website, mobile application, online application, streaming service, and other electronically accessed interface operating on the internet. (4) United States user The term United States user means a user based in the United States, as determined based on— (A) reliable device geolocation, as used in the ordinary course of business, for determining the location of a user, (B) operation of a user's device through an Internet Protocol address based in the United States, (C) billing address, (D) business customer location, (E) location in which an digital advertising service was used, or (F) such other methods as may be prescribed by the Secretary. (d) Payment of tax (1) In general The tax imposed by this section shall be paid by the covered taxpayer that received the digital advertising revenue. (2) Rule of construction with regard to certain penalties The penalties imposed under section 6652 for failure to make deposits of tax and under section 6662 for underpayment of tax shall apply with respect to the tax imposed under this section in the same manner as such sections are applied to other excise taxes imposed under this title. (e) Privacy rule No provision of this section shall be deemed to require a person to collect precise geolocation, communications content, or other sensitive personal information that such person does not otherwise collect in the ordinary course of business. (f) Return requirements (1) In general The Secretary shall require any applicable entity to file a return (in such manner as the Secretary may prescribe) with respect to each taxable year that includes the following: (A) Total revenue. (B) Total digital advertising revenue that was attributable to United States users. (C) Methods of determination for United States users for purposes of subsection (c)(4). (D) Any entities included pursuant to subsection (b)(2). (E) Any other information, as identified by the Secretary pursuant to regulations issued pursuant to subsection (g). (2) Applicable entity For purposes of this subsection, the term applicable entity means an entity which satisfies the requirements under subparagraphs (A) and (B) of subsection (b)(1), except that subparagraph (B) of such subsection shall be applied by substituting $40,000,000 for $50,000,000. (g) Regulations Not later than 18 months after the date of enactment of this section, the Secretary, in consultation with the Secretary of Commerce, shall issue such regulations as may be necessary or appropriate to carry out the purposes of this section.. (b) Clerical amendment The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 50A the following new item: Chapter 50B—Artificial intelligence. (c) Effective date The amendments made by this section shall apply with respect to any taxable year beginning after December 31, 2026.