able to tax the sale. All states require the seller to collect sales tax due at the time of sale and to then give it to the tax assessor's office. The seller is required to collect the tax because the logistics involved in tracking and enforcing sales tax owed for every state resident would be impossible in any practical sense. If sales tax was not collected at the point of sale, then states would never be able to generate revenue from sales taxes. However, for companies that are out of the states jurisdiction and don't have any nexus (legal connection to the state that would allow the state to require that they collect sales tax), the legal responsibility to pay the state sales tax falls on the purchaser. Since enforcing this is impossible for the states, most just write it off as a loss and ignore it.
             A state tax agencies only chance to collect sales tax on transactions that originate out of state is to prove nexus, and require the selling company to collect or pay the tax owed. Nexus can easily be established if the company has a physical location in the state. For instance, if the state is based in another state but has a retail outlet in the state collecting tax on the transaction then the seller is required to collect the sales tax at the point-of-sale. However, there are some other ways for a state to establish nexus. The US Supreme Court has rules on several cases that help define how nexus can be established. One example is the Geoffrey v. South Carolina (1993) case in which the court stated that "...nexus can be established through the existence of intangibles – in this case, trade names used in state." (Mauro, 2000, p. 15) The precedent set in this case has allowed many states to sue out-of-state companies for owed sales tax.
             While states may require companies that have nexus to collect sales tax, they may not impose a new tax specifically for internet based transactions. The Internet...