Ever wonder you only pay sales tax on online purchases some of the time? The answer has to do with whether or not the company selling the product has a "physical presence" in your state, which the Supreme Court defined in the Case Quill Corp v. North Dakota. In this case, the state of North Dakota tried to force Quill, a large office supplier, to pay use tax on all of its sales to customers in North Dakota. The Supreme Court ruled that states can only require businesses to collect sales or use taxes if they have a physical presence (office, distribution center, retail store) located in the state. Since Quill did not have a physical presence in North Dakota, the court ruled the company did not have to collect sales taxes on purchases made in North Dakota.

That has been the standard since 1992 when the case was decided. So, as a customer, you will only pay sales tax on purchase made from companies that are located in your state. This, however, does allow you to buy items from certain companies, tax- free, which is heresy in a nation that is heavily in debt and constantly trying to squeeze more money out of the American people.

So what is big government's solution? Join forces with big business to force businesses to collect sales taxes from all 50 states! And this wouldn't necessarily mean that companies would be responsible for complying with just 50 different tax rates and jurisdictions. There are actually over 9,700 different tax jurisdictions in the country when accounting for various sate, city, and county taxes.

But, wait? Why would businesses be in favor of more regulations? As is often the case, it is big business that is attempting to give themselves more regulations. Many of the big box stores (Wal-Mart, Target, ect.) already must collect and remit sales taxes for online purchases in all 50 states because they have a physical presence in all 50 states. Many smaller businesses, however, do not. So what else is big business to do but use the strong arm of government to hurt their smaller competitors?

Many state governments are also in favor of an Internet Sales Tax because states would rather tax their way out of a budget mess rather than make the cuts necessary to get their fiscal house in order and believe that taxes on Internet sales will help raise revenue.

While there are a few slightly different proposals in Congress to allow states to tax online sales made out of state, all would place huge regulatory burdens on small businesses as well as raise taxes on the American people.

Tell your representatives and senators to oppose any attempt to allow states to tax online sales from out-of-state sellers by calling them at 202-224-3121.