Sec. 2. Tax on digital advertising services

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Chapter 33 of the Internal Revenue Code of 1986 is amended by inserting after subchapter C the following new subchapter: Sec. 4286. Imposition of tax. There is hereby imposed on each covered taxpayer for any taxable year a tax equal to 50 percent of the amount by which the taxpayer’s gross receipts for the preceding taxable year which are attributable to hosting digital advertising services in the United States exceeds $2,500,000,000. For purposes of this section, the term covered taxpayer means, with respect to any taxable year, any person— engaged in the business of hosting digital advertising services, and whose gross receipts for the preceding taxable year which are attributable to hosting digital advertising services are at least $2,500,000,000.

For purposes of this section, the term digital advertising services means advertisement services on digital interfaces, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, sponsored shopping and search results, and other comparable advertising services. In this section— The term gross receipts has the same meaning as when used in section 448(c)(3)(C). The term digital interface means any type of software, including a website, a part of a website, or an application.

The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations that impose a penalty fee on any person engaged in the business of hosting digital advertising services who deliberately advertises or promotes the use of virtual private network services for the purpose of evading the tax imposed under this section. . The table of subchapters for chapter 33 of such Code is amended by inserting after the item relating to subchapter C the following new item:

Subchapter D—Digital Advertising Services . The amendments made by this section shall apply to taxable years beginning after December 31, 2025.