The US Supreme Court is FINALLY agreeing to hear a case regarding sales tax. They’ve stayed out of since the decision in Quill back in 1992. At that time, the US Supreme Court laid out the test for where state nexus was. It was all based on physical characteristics.
For example, physically where is the sale made? Physically, where is the fulfillment done? And so on.
There’s one big problem. What was true for business in 1992, isn’t true for business 17 years later in 2009. What’s changed? It’s one word and it starts with “I”. The Internet has changed everything. And it’s become harder and harder to determine who gets to collect the sales tax.
There has been a floundering attempt to resolve the question through the Streamlined Sales Tax Project. That’s a grass roots effort to get a majority of the states to try to agree to one system. But the “united” states aren’t always so united, and state and local self-interest have gotten in the way.
The Supreme Court has chosen to weigh in on the Hemi case, to be heard Fall 2009. It’s not specifically about sales tax. In this case, they’re looking at NY excise taxes that were not collected by a New Mexico online cigarettes sales company when he sold and shipped cigarettes to New York. http://online.wsj.com/article/BT-CO-20090504-710167.html
This will be an interesting one to watch.