What most people call sales tax is actually properly termed “sales & use tax”. The vendor is charged with collecting sales tax based on nexus/physical location of the purchase and goods being exchanged. To the extent that goods are purchased from a vendor without nexus (mail order, telephone, internet), the buyer is obliged to remit the “use” tax (same rate) to the state treasury. Or such is the case in most states, and the reason that mail order companies often query the purchaser’s location. As a practical matter, I know few taxpayers, if any, who send in their use tax annually. Nor am I aware of whether any state is auditing this on the individual level.

I haven’t practiced in the state tax arena in awhile, so I’m not sure what the developments are with respect to internet purchases, but when I last attended a bar section meeting on the topic, it was the looming question on the horizon. Because no internet based company wants to admit to nexus with all 50 states, and have to collect 50 different tax rates and remit 50 returns quarterly. Can o’ worms.