Like many shoppers, attorney Stephen Diamond buys lots of stuff online. But unlike other consumers, he sues retailers that don’t charge him state and local sales taxes — and is making a profit doing it. …
Online buyers are required to pay local and state sales taxes on purchases made over the Internet, but are rarely asked to do so. States and online retailers have argued for years over whether the retailers should and could collect the taxes, but now states are becoming increasingly aggressive. This month, 18 states formed a coalition to make it easier to collect taxes on Web sales.
State laws allow for the collection of taxes on Internet purchases if the retailers have a physical presence — a “nexus” in legal terms — in the state. But different states define “nexus” differently. In some states, the regular presence of a single sales person, even a traveling one, is enough to establish a nexus. In Illinois, a retailer is considered to have a physical presence if a customer can return an item purchased online to a retailer’s physical location.