States are eyeing sales tax on out-of-state internet companies as a source of revenue. By using qualifications other than physical presence, states are hoping to increase sales tax. For example, advertising within New York now establishes nexus.
As budgets tighten, more states will follow New York’s example. Sales tax on Sales tax compliance capabilities should be given strong consideration when making ERP and e-commerce technology choices.
Interstate commerce is not subject to sales tax because the courts ruled that it would place an unnecessary burden on companies selling across state lines. Advances in technology have significantly reduced this burden. It seems almost certain that businesses will eventually be required to remit sales tax to other states for sales that ship to that state’s residents.