Federal Laws on Interstate Commerce are first in line over all state laws on interstate commerce. According to Federal Law and Congress internet sales are exempt for now from sales taxes. Only the Federal Government can change it. States can pass whatever laws they want, BUT their state laws must not violate the Federal Laws. Only Congress has the power to tax and regulate interstate commerce.

The states are not goig to increase the tax revenue they collect. People only have so much money to spend. The more money the states take away from consumers in taxes, the less money that leaves for people to spend and create jobs.

You Go Amazon!!

I feel it is important to provide more detail and some clarification regarding three points brought up in this article:
1. The lead in "uniform national sales tax"
2. More detail about the Streamlined Sales Tax Agmt.
3. More detail about the redefinition of nexus

Response 1.
The lead-in to this article:
"While Washington considers a uniform national sales tax on internet sales.."

This seems a bit misleading. To the best of our knowledge, neither the House or the Senate are contemplating a "uniform national sales tax". Such language implies a basic "flat-rate" sales tax, which would require the federal government to manage and distribute sales tax proceeds, irrespective of local voter initiatives. This is contrary to one of the founding principles of our country - taxation WITH representation. When WE vote for funding our local schools, fire, police, or transportation, the mechanics by which those ballot measures are usually funded are through sales taxes. These Tax decisions are made by US - not by some far away central government.

Response 2.
So, while no one in Washington DC is working on any "uniform national sales tax" they ARE working on the "Main Street Fairness Act of 2009", which is being prepared for introduction before congress. The Main Street Fairness Act is drafted "to grant states the authority to require all sellers, regardless of nexus, to collect those states' sales and use taxes," mandating compliance with the Streamlined Sales Tax Agreement (or "SSUTA").

More on SSUTA:

As Mr. Barlow briefly touched upon, SSUTA currently has 23 Member States (which have adopted and implemented all aspects of SSUTA). Readers should be aware that SSUTA is not a new construct which was just created, but rather it is the result of almost 10 years of effort and refinement involving a members of the business community and 44 states (including New York).

SSUTA creates uniform standardization of the governing principles around local sales taxes including:
1. Classifications of taxable goods
2. Definitions regarding "sales tax holidays"
3. Rate change notice provisions
4. Rate publication formats

SSUTA also manages certification of technology platforms and service providers capable of helping businesses easily comply with SSUTA.

Response 3.
SSUTA is VERY DIFFERENT from the redefinition of nexus approach of the new laws enacted in New York (and being considered by North Carolina, Hawai'i, and others). The basics of this redefinition of nexus instruct that when out-of-state company (let's say "Company X") pays a sales commission to a web site located in New York ("Company Y") for linking a customer from Y's website to X's website, then Company X has established economic nexus, and is then required to register as a business in that state - with full licensing obligations and tax collection requirements, just as if Company X had a "swinging door" retail location in that state.

The law in NY is awaiting appeal in the NY supreme court. If overturned, the law proposed in NC and Hawaii will also fall by the wayside.

SSUTA would still require all Internet Sellers to file taxes in over 7500 tax districts. You would have an option of using a piad service, or the service offered by Mr. Campbell. Either way, just gathering data to comply with the proposed law is enough to put many small businesses. Worse yet, it would be impossible to accuratly determine the correct tax, as tax districts are not defined by zip code.

The better solution is for States to make Use Tax mandatory on the consumer rather than voluntary in it's current form. Have the Merchant Accounts collect the tax and remit directly to the State's DOR (States pay the fee). The CC companies already have the data, and Amazon has the system in place now to do this very job. Upgrades in software would be minimal. Best of all no new law would need to be written, as well as a cost savings to small business in $$ as well as labor.

See my blog for additional details.
http://www.thedumbdog.com/blog?=p62

Amazon's complaint about taxing the internet is complete bull crap. Small business' need to be on equal footing. No one but Amazon benefits when these goods are not taxed...