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Online Sales Tax Law Yet to Reach Most States

Dire economic forecasts couples with unending demands on state financial resources appeared to be a catalyst that would lead more states to pass “Amazon laws,” where online retailers would be forced to collect sales tax regardless of their location.

But in an area where one might logically expect most if not all states to quickly follow suit, only a few states have enacted these laws. A map on display at Forbes shows fifteen states with this legislation in place, and two more that have passed these laws but don’t have them in effect.

While populous states like California, New York, and Texas do have online sales tax laws in effect, Florida is one larger state that does not. It’s not for lack of trying though, as state legislators have made six attempts to pass an online sales tax bill without success.

Traditional sales tax laws once only applied to online sellers if those businesses had a physical nexus, or presence, in a given state. One might argue this helped Amazon.com leap to internet retailing prominence, as eager consumers outside Amazon’s Washington state home could buy items without paying sales tax (and likely forgetting to declare such purchases under any applicable use tax laws in their home states.

It could be that many states are waiting for federal legislation to pass and settle the matter. Illinois and Colorado passed laws that were later struck down by the courts. The federal Marketplace Fairness Act however is still languishing in the House of Representatives, and some state attorneys general claim the Act violates the Due Process Clause of the Constitution’s 14th Amendment.

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David A Utter
David A Utter
David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.