The pilot project could last as long as a year. Proponents of the Streamlined Sales Tax Project said they hope a less cumbersome system will lead to legislative initiatives to tax online sales. Now, the system essentially is paper, not technology-based, with thousands of taxing districts throughout the country, each with its own rates and definitions. Many dot-com retailers don't have nexuses in all states and, therefore, are not required to collect sales taxes for each state. Buyers of online goods are supposed to pay these taxes to their states, but few send in the money, and states find there is little they can do to enforce compliance.
Businesses typically comply because they can be audited.
But most consumers don't pay, and there is no easy way for states to enforce this. There are 7,500 separate taxing districts in the United States, each with its own rates and definitions of what is taxable, through which merchants must determine the amount of tax due, collect the tax, remit the tax and file tax reports. With e-commerce growing at a fast clip, states, many with shrinking budgets, are working to streamline their sales tax systems in hopes of persuading Congress to require that Internet retailers collect sales taxes. If we fail, lawmakers will have to come up with a new way to pay for schools, roads and law enforcement. The New Economy has seen the number of people nationwide who are shopping online skyrocket in recent years.