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An article titled “The States Strike Back” on WebCPA.com outlines several ways that states are intensifying efforts to collect sales tax. This includes extending the definition of nexus:  In addition to New York, North Carolina and Rhode Island with explicit nexus laws, “14 additional states [have] said that they would find nexus for in-state affiliates [which] suggests that these jurisdictions may believe that the Amazon law approach fits within their sales tax nexus policy.”  the article also discusses Colorado’s approach of requiring notification by remote vendors of the obligation to pay use tax, and the requirement that vendors report total annual sales by each purchaser to both the purchaser and the state.

All of the above tactics are in response to state budget shortfalls —- a whopping 46 states had shortfalls when adopting budgets for the current fiscal year.

Clearly, state support for passage of Main Street Fairness is growing.  And, as we continue to point out, the adoption of MSFA would head off continued growth of a patchwork of state laws and enforcement efforts.

Two articles in the last 24 hours highlight the efforts of states to step up enforcement of Use Tax collection.  The first article, published in The Birmingham News and picked up on other sites and blogs, states that the Alabama Department of Revenue is sending letters to some residents in an effort to collect unpaid consumer use tax from 2006 through 2008.  ”For most years in the past decade, only about 6,000 to 7,000 of the 1.8 million Alabama tax returns reported a use tax. With researchers finding that states are losing millions of dollars each year through uncollected use taxes, many states are stepping up the search.  Besides the letters, Alabama tax authorities are implementing tax-tracking computer systems, and suggesting that audits are possible — all in an effort to collect part of the estimated $100 million a year the state is due.

The second article, on msnbc.com, outlines a similar effort underway in Nebraska to contact charities that owe unpaid use taxes.  The article also interviews consumers from various states who express that they are unaware of the use tax requirements, and surprised to learn that they are supposed to track, report and remit payments on internet purchases.  The article also covers the efforts underway in other states (Colorado, New York and Rhode Island) to solve the same problem.

A week ago we published a press release that highlights the privacy concerns of these types of state laws and state enforcement efforts. We at FedTax.net are convinced that the Main Street Fairness Act is a sane, reasonable, workable solution to the internet sales tax issue and will head off the rush to pass a patchwork of new state laws.  More state laws and rules means more privacy concerns, more consumer confusion and more fairness issues — as no enforcement effort will get even a majority of consumers to comply.  Read our Privacy Petition (here’s our Press Release) to learn more and express your support.