Estimated reading time: 6 minutes

I’ve been asked a lot recently about section 230 – a phrase that’s been tossed around a lot with respect to stimulus checks.

Section 230 isn’t a tax provision (in fact, there isn’t even a section 230 in the Tax Code): it’s actually a telecommunications law. And I’m not a tech or intellectual property lawyer: my focus is tax. But in the spirit of trying to explain what section 230 has to do with stimulus checks – which are tax-related – I’m going to give you a quick summary. If you need a deeper dive, there’s some good stuff out there from tech lawyers.

What is Section 230?

Section 230 is part of a law – the Communications Decency Act (CDA of 1996) – which was passed in 1996. It provides liability protection for social media companies like Twitter and Facebook with respect to content posted by their users.

The meaty part is here:

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

47 U.S. Code § 230

And you can find the full text of the law here.

What the law does, basically, is say that you can’t hold these companies – and other intermediaries like Internet Service Providers (ISPs) – legally responsible for things that other people post. There are some exceptions including conduct that is criminal, as well as copyright and other intellectual property, but the idea is that you – not the platform – should be responsible for your conduct, not Twitter or Facebook. Without section 230, companies might be so scared of being sued that they would either have to monitor everything posted all of the time – or they might just throw in the towel and decide not to provide the service at all.

Why Does Section 230 Exist?

The history of the bill dates backs to a 1995 court ruling against the online service, Prodigy. Prodigy isn’t around anymore, but back in the day, it was a top online service platform, along with CompuServe – another blast from the past. In 1994, an anonymous user created a post accusing Stratton Oakmont (a securities firm founded by Danny Porush, Brian Blake, and Jordan Belfort – if that last name rings a bell, you’ve likely seen Wolf Of Wall Street) of fraud. Stratton Oakmont sued the anonymous user and Prodigy for defamation. They won, with the court holding that since Prodigy did some moderation, it should be treated as a publisher. The case was Stratton Oakmont, Inc. v. Prodigy Services Co., (N.Y. Sup. Ct. 1995).

(Fun fact: In 1996, Stratton Oakmont shut down – for fraud – after it was expelled from the National Association of Securities Dealers (NASD) because it posed “an ongoing risk to the investing public.” A few years later, Porush and Belfort went to prison on securities fraud and money laundering charges.)

In 1996, section 230 was signed into law to rebut the presumption under Stratton Oakmont that companies should be treated as a publisher under the law. Now, if tech companies moderate some material – like keeping adult content away from children – they are protected from liability for other user content. In other words, if Facebook takes down sexually explicit content, I can’t use that as a justification to sue Facebook because my brother called me a name online. And, in the same vein, a restaurant can’t sue Facebook because it got a bad review from a customer.

Not everyone is a fan of section 230, including the President.

Why Does The President Want To Repeal Section 230?

In May of 2020, Twitter fact-checked some of the President’s tweets related to voting by mail. That resulted in a war of words with the President. On May 28, 2020, President Trump issued an Executive Order, targeted at tech companies, including Twitter, stating that, “Twitter now selectively decides to place a warning label on certain tweets in a manner that clearly reflects political bias.” He called for legislation to fix what he saw as a problem, specifically calling for a repeal of section 230, but Congress did not act.

The Stimulus/Spending/Extenders Bill

So what does this have to do with taxes? Remember the stimulus/spending/extenders bill? That bill passed the House and Senate and landed on the President’s desk, where he signed it – but only after pausing a few days to insist on some changes, including higher stimulus checks ($2,000 per person) and elimination of what he deemed wasteful spending.

When the President signed the bill into law, he said he was doing so with the understanding that the Senate would consider three things:

The Senate will start the process for a vote that increases checks to $2,000, repeals Section 230, and starts an investigation into voter fraud.

President Trump statement, December 27, 2020

He specifically signaled for the repeal of section 230 after signing the bill into law – even though there’s no mention of section 230 in the stimulus/spending/extenders bill.

What About The NDAA And That Veto?

When the bill went back to Congress, Senate Majority Leader Mitch McConnell (R-KY) urged his colleagues to overturn the veto, saying, “For the brave men and women of the United States armed forces, failure is not an option. So when it is our turn in Congress to have their backs, failure is not an option here either. I urge my colleagues to support this legislation one more time.” The veto was quickly overridden with a House vote of 322-87 and a Senate vote of 81-13 on January 1, 2021.

McConnell Ties Checks To Section 230

However, a few days before the veto override vote, on December 29, 2020, Sen. McConnell had acted on section 230. He introduced a bill that would have done what the President asked: tie the increase in stimulus checks to $2,000 to the repeal of section 230. It was a combined, not a stand-alone, bill. McConnell’s bill would have also required a bipartisan commission to study the “integrity and administration” of the 2020 election.

You can read the text here. It was not seriously considered.

We Have A New Congress

So what comes next?

The new Congress – the 117th – has already been sworn in. Under the Constitution:

The Congress shall assemble at least once in every year, and such meeting shall begin at noon on the 3d day of January, unless they shall by law appoint a different day.

20th Amendment, section 2

That happened on schedule this year.

Any changes to existing laws, including a repeal of section 230 or increases to stimulus checks, must be taken up by the new Congress. Stay tuned.

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Author

Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.

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