PFM Articles 
Can Internet Sales be Taxed?
C. RYAN SPARKS, MELANIE G. MCCOSKEY, PH.D., CPA AND JOHN M. ALVIS
PFM, Vol. 4 No. 2,
(2004)
Many Internet sellers are not required to collect sales tax on
their Internet sales if they have no physical nexus in the state. Instead,
the end-user is required to pay use tax on such items, but the
compliance rate is low. As such, states are losing large sums of
revenue, and would like to have the seller collect the tax and remit it to
the state. Currently, the Commerce Clause, as interpreted by the
Supreme Court, prohibits states from requiring remote sellers to collect
the tax. Congress is loath to interfere, as doing so may require
business to file thousands of sales and use tax returns each month. In
response, states have joined together in the Streamlined Sales Tax
Project to reduce the administrative burden on businesses, in hopes
that Congress will require the remote sellers to collect and remit the tax
to them.
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