The web has revolutionized our lives. You would not be reading this article online even just fifteen years ago. The technology just wasn't there. Now, we have virtual people getting married! Wait, I'm not sure if that is a good thing.

The one area of much controversy on the web that doesn't get a lot of ink, but is about to, is the sales tax issue. Simply put, there is none. I live in San Diego. If I buy a book from Amazon.com, I don't pay any sales tax on it since the site doesn't collect it. If I buy the same book down the street at a Barnes & Noble, I do pay sales tax because the store is here in California.

As you might imagine, local retailers think this is a tad unfair. Maybe they are right. Maybe they aren't. Up to now, however, no state has been able to come up with a way to force Amazon and other big retailers into collecting and paying the taxes. There are laws on the books from the 1970s related to catalog sales that hold that such companies do not have to deal with sales taxes if they don't have a physical presence in the states in question. Up to now, this standard has been applied to the web as well.

Up to now!

As you know, the government is dead broke. The Federal Government is sitting on over $13 trillion in debt. States are in worse shape because they can't carry debt. Instead, they have to cure any deficit immediately. One area they are looking at now is the online sales tax. Now, they've come up with a pretty interesting way to get it.

Let's assume you buy something online from Amazon, Overstock, eBay or whomever. If the site doesn't collect sales tax [and your state charges it], you are usually legally required to calculate the tax and send it in to the state with your tax return. Almost nobody knows this much less does it. Since states can't access the information of the online stores, they can't track it and there have been no audits performed.

The new state laws aim to change this. States like Colorado and California are taking a new approach. They are passing laws requiring the online retailers to collect and pay sales tax OR total up the amount due for each taxpayer in the state and send the report to both the state and taxpayer who must then remit the amount due.

This new approach is definitely going to turn into a trend that most states will follow. If it passes muster in the courts, you'll receive a bunch of sales tax statements every year in [probably] January and have an even bigger tax bill when tax season rolls around.

Oh, joy.