Current developing trend of sales tax on E-business

James G.S. Yang, Peter L. Lohrey, Leonard J. Lauricella

Research output: Contribution to journalArticlepeer-review


This article explores the development of sales tax on e-business. It points out that the problem was rooted in the fact that the seller is required to collect and remit the tax to the buyer's state government. If the seller and the buyer do not reside in the same state, the buyer's state government has no jurisdiction over the seller, unless there is a "physical presence" of the seller in the buyer's state. A state government can require an out-of-state seller to collect sales tax from the in-state buyer only when there is "physical presence." However, what constitutes "physical presence" can become very controversial and complex. This article discusses many court cases. As Internet commerce was incorporated into the business operations, a great many transactions were executed online. The concept of "physical presence" became even more complex, as websites and digitized products became more commonplace. A new concept of "economic nexus" has evolved under many state statutes. Now an out-of-state seller may be required to collect sales tax from an in-state buyer, regardless of "physical presence." In 2013 the United States Senate enacted the "Marketplace Fairness Act of 2013." This embraced the concept of "economic nexus." This legislation could potentially end or at least greatly simplify all controversies in e-business taxation. This paper further notes that the concept of "economic nexus" may be extended to the arena of state income tax.

Original languageEnglish
Pages (from-to)60-73
Number of pages14
JournalInternational Journal of e-Business Research
Issue number2
StatePublished - 1 Apr 2015


  • Amazon Tax
  • E-Business
  • Economic Nexus
  • Marketplace Fairness Act of 2013
  • Physical Presence
  • Sales Tax
  • Streamlined Sales
  • Use Tax Agreement


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