There has never been a question of whether states can charge sales tax on internet sales. States with an income tax have had a line to self report internet purchases and pay the sales tax when filing.
The bone of contention is with those states without an income tax. They have to rely on individual internet companies charging and collecting sales tax on behalf of the state, and forwarding that revenue to the state.
The point of litigation is can a state compel a company with no physical presence in a particular state to collect and remit sales tax for that state.
This is a question of regulating interstate commerce, and is a Federal question, and barring any federal laws requiring reciprocity of sales tax collection among the several states, my answer is ‘no, you cannot compel an out of state entity to collect and remit sales taxes to the state.’
Technically, the state use taxes fill that hole. If those who technically owe that tax do not file and pay, then collection and tax penalty efforts are possible.
But this isn’t as easy as a standardized sales tax collection system.
I’ve owned a business here in Texas that sells via the internet nationwide. Have for many, many years. I know the regulations very well.
If I sell to anyone in the state of Texas that does not have a sales tax exemption number or special exempt status (I.E. farm use, religious organizations etc.), I collect Texas sales tax on the sale.
If I sell outside the state I do not charge any tax at all, whether Texas or of the state in which sold. The only exception to this rule is if that business has a presence in Texas. That is, any branch or home office is located externally to Texas but has locations in Texas they become taxable if they don’t present a valid exemption statement.
Now! The worst part of this nightmare they are trying to foist upon us is the fact that each business will become mired in a heap of paperwork and administrative hassle of the massive administrative “spider web” of trying to report to (and adhere) to their individual sales tax reports, rates and rules. Each quarter my business could be responsible to filing reports to EVERY state I sold in along with sales tax reimbursement to Every on too! One quarter it might be only 3, the next 45, the next 30 and so on. It would become a nightmare and the administrative costs would definitely increase the cost of my products.
There is one bright glimmer of hope however, the accounting leaches will have a field day with all of that new business!