It might have been the right solution in 1773, but fighting the online taxman doesn't work today. That's because tax laws are now so ambiguous that whole online businesses could disappear overnight through their clarification and enforcement. And that clarification and enforcement is a time bomb waiting to explode.
Online businesses fear penalties, back taxes and even criminal sanctions.
Instead of fighting a losing battle to avoid all taxation, online businesses need to take the reins and help build an e-commerce tax system that recognizes the strengths and weaknesses of technology. Right or wrong, local governments fear losing revenues to online merchants that sell to their residents, but remit taxes for just one jurisdiction in some other state. The corresponding fear for online merchants, especially midsize and smaller businesses, is that of identifying each customer and dealing with thousands of tax jurisdictions, special charges and exemptions. Online business is risky enough. If U.S. online merchants are pushed to collect taxes in this fashion, only big businesses will survive.