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"That makes sense. What if I manufacture goods in my cottage industry? I buy lots of handcrafted items at the flea market
directly from the maker. If I knew them better I could special order and pick them up at his house. Are we going to send out federal agents to do this to make sure these people charge tax? How is that less intrusive than employers witholding income
tax?
Also, how will I buy ammo from a private seller or small retailer without the government tracking it?"

I'm just today contemplating all this and trying to figure out all the angles, but let me try a couple of these questions.

How is this less intrusive than the current witholding system? For businesses it isn't. If business owners are stuck being the collectors, they will be the targets of the enforcers. If it is based on receipt totals the record keeping should not be a problem for me. I would be concerned if I had to provide a lot of inventory purchase and sales details on a regular basis.

If sales totals are all that must be reported, they should not know who buys what. If you are still able to buy ammo or whatever for cash, there will be no record with the retailer you purchased from other than a cash receipt.

People such as crafters who make things for resale should simply be considered wholesalers. The people they sell to should be required to collect the tax when the item is sold. If they sell directly to the public, they are a retailer and probably will be required to collect the tax. I think that's fair, though potential for abuse of this is obvious among people who don't have a regular place of business.

If sales totals are all that must be reported, they should not know who buys what. If you are still able to buy ammo or whatever for cash, there will be no record with the retailer you purchased from other than a cash receipt.

If everyone complies, then any retailer can simply sell anonymously. But if some bad apples start to sell smuggled nails from the back of their truck, then the government may start tracking trucks and nail making equipment. That still might not apply to ammo though as long as there are legitimate dealers. I am simply worrying that in their zeal to track everything especially benign things, they will develop the ability to track everything to the purchaser. I can't say specifically how because I don't know how. But I do know that tracking would be necessary to stop the black market.

People such as crafters who make things for resale should simply be considered wholesalers. The people they sell to should be required to collect the tax when the item is sold. If they sell directly to the public, they are a retailer

Fair enough, but just keep in mind some craftsmen I deal use use home made materials that can't be tracked so the new I.R.S. would inevitably suspect them of cheating (selling untaxed or lower taxed units) and send out agents to test their compliance. This could quickly devolve into big government vs the little guy.