The growth of catalog sales through the 1980s put a wrinkle in this approach. Catalog companies could sell virtually tax-free to any customers in states where the business did not have any physical operations, providing them with a competitive advantage over traditional retailers and denying states that tax revenue. It's important to note that tax laws do not maintain that states cannot charge sales tax on such remote sales. They only say that the states cannot force these businesses to charge sales tax to their customers. Technically, the consumer is ultimately responsible for paying any sales tax.
Reports differ on just how much revenue states stand to lose from the growth of e-commerce.
Either way, they will lose more and more as e-commerce continues its blistering growth. To eliminate the loss of taxes from remote sales, states and other local governmental groups are pushing for tax assessment based on where the purchaser lives rather than the seller's location. This way, consumers lose all tax incentive to favor one type of retailer or another. There are roughly 6,500 taxing jurisdictions in the United States created by separate state, county and city laws. Complying with all of these could bury a company in a mountain of tax forms.