I’ve written on aspects of this topic many times for many years – the state challenges in trying to collect all of the sales and use tax they are due for sales to their in-state consumers and businesses. With the requirement that a vendor only has to collect sales tax if they have a physical presence in the state and e-commerce enabling businesses to have customers everywhere but perhaps only one physical location, states become more dependent on trying to get their in-state consumers to self-assess use tax. States tend to do a poor job educating these folks about their use tax obligation.

It would just be far easier to have all vendors collect. However, that is unlikely to happen, even with federal legislation (such as S. 743, the Marketplace Fairness Act). This legislation is likely to exempt some type of small vendor. Also, it is unlikely to have impact on a vendor located outside of the United States.

State efforts through affiliate nexus/click-through nexus/Amazon laws, will not capture the entire amount owed. And, it is too easy for vendors to avoid these laws by cancelling their arrangements with in-state affiliates. Meanwhile, consumer use tax bills pile up.

In accordance with Circular 230 Disclosure