[edited 3/16 to add link to website "stand with main street"]
Most people will likely have read that Amazon.com is a fierce fighter of any obligation to collect state sales taxes on its retail sales. There's a website now devoted to debunking the various reasons Amazon.com provides for not collecting sales taxes. See standwithmainstreet.com (offering a bundle of reasons for why Amazon's refusal to collect sales taxes don't make sense).
In Texas, where Amazon has one of its huge warehouses, it is at battle with the state, which claims that the warehouse is sufficient nexus to require the company to collect state sales tax on its sales. Amazon's response? It plans to dump the warehouse and dump plans for building another one. In other states, like Illinois, legislatures are considering legislation that will require the company to collect sales tax whenever it has affiliates that run its advertising and create access points for it in the state. Amazon says it will just dump the affiliates, and run its online sales solely through its own website. See Kopytoff, Amazon Pressured on Sales Tax, New York Times, Mar. 13, 2011.
So what's the right answer here? It seems to me that the Supreme Court needs to update its understanding of nexus for constitutional purposes to take into account the significant changes in the way we interact based on the new context created by a wireless world. Physical presence once readily defined the reach of a commercial entity--if it had a store or warehouse distribution point or other physical presence in the state, it had a presence in the state; if it did not have such a site in the state, it did not have a presence in the state. But surely that notion of physical presence should no longer underlie the constitutional reach of a state's ability to require companies to collect the state's sales tax on the companies' sales within the state. If it does so limit enforcement, it creates a wholly artificial differentiation between companies that run actual physical stores in the state (often with online counterparts) and companies that interact with residents of the states through their online sites. And that differentiation is problematic, because it gives those companies that operate solely online an unfair advantage, in that they do not have to carry out the administrative task of collecting tax and turning it over to the state. And since many residents in the state will not self-report the tax owed on items that they purchase online (and without the company's report the state itself would have tremendous difficulty attempting to enforce collection), residents will consider the online purchase less costly--treating the inappropriate tax savings achieved by failure to report as required (and failure of the internet company to collect the tax) as a price advantage for the online merchant and causing the in-state company to suffer a comparative loss of sales. That results in unfair discrimination in favor of out of state companies--something that runs counter to the spirit of the commerce clause, if not actually a violation of it.
The best answer, then, would be for the Supreme Court to revisit its conclusion in the 1992 case Quill Corporation v North Dakota, which required a physical presence in order for states to mandate collection of their sales taxes by companies that make sales to their residents. The Supreme Court should overturn that precedent and conclude that online access to a state and more than a de minimis number of internet sales to a state's residents constitute sufficient nexus to permit a state to require a commercial entity to collect sales tax at the point of sale on behalf of the state.
It is not as if that is such a complex requirement that it would be too difficult to ask companies to do. Companies that sell over the internet have already got various kinds of procedures in place that take account of where the purchaser is located compared to where the product is stored--they charge for shipping and handling and they compute the charges for sales tax in those cases where the purchasers are residents of states in which they have a nexus. It would be relatively simple for them to extend such calculations to include appropriate sales tax in each state.
But will this Supreme Court recognize the error of its ways? It's doubtful. The majority of the court is made up of rightwingers who are exceedingly friendly to big business. Much of the "originalism" and "traditionalism" used in that majority's interpretation of cases is relied on because it is super-friendly to big business--that is, a traditionalist approach as employed by Scalia and Thomas may tend to result in decisions that are super protective of property rights and business interests at the cost of the "little guy" who does not have large property interests at stake. Combine that with the right's tendency to disdain the interests of government and one suspects that it will be decades before a new Supreme Court reconsiders the Quill decision and comes to the correct conclusion that physical presence is an archaic test in an age of globalization and the world-wide web.