South Dakota requires sales of $100,000 a year in state or 200 sales a year to the state before an out of state retailer is required to collect sales taxes. In our almost ten years of business, I'm sure we've shipped no more than 10 orders totally a few hundred dollars (if that) to South Dakota. So, if other states were to follow South Dakota's lead, I doubt it would have much effect on the really small retailers like us.
But, I suspect that SD target only larger retailers because that's where the money is, they would have a chance to collect, and it's a large enough sum that retailers wouldn't just stop shipping to South Dakota.
If another state now passes a law requiring all out-of-state retailers to collect sales tax for them (regardless of how small), we, like most small businesses, would just ignore it. There would be no way for them to enforce the law and it wouldn't be worth the state's effort to try to collect (since there wouldn't be much money involved).
I really don't expect this to have much of an effect on small retailers like us. In the short term, it might benefit us if states adopt laws like South Dakotas which only affect larger retailers.
But, in the long run, I assume states are going to want us to collect sales tax on all mail order sales. To do that, they are going to have to make it so that their laws are enforceable and don't put so much of a burden on business that they just stop dealing with customers in the state.
What I expect will happen is that the sates will join together and require that businesses in their states collect taxes for other states. That would make the laws enforceable. But, that's going to run into obvious constitutional issues unless Congress gets involved. I expect Congress to act, however, because having things defined at a national level will benefit the states (because they will receive the taxes) and businesses (because it will make things more uniform). Sales tax rates vary by state and often within states. And rates can vary based on the types of products. Congress could define rates that are uniform across states or create a common system retailers can use to calculate the tax on a shipment. I actually expect that payment processors like PayPal would compute the tax and add it.
So. in conclusion, I don't see this having any major effect on small businesses like us.
Never owned a business, but don't most websites/etc. use payment processing services these days, to handle things like credit cards or things like PayPal? I'd sure hope that they could take care of at least calculating the appropriate taxes based on the ZIP code being shipped to (similar to calculating the shipping charges), seems like it'd be really nice if they withheld that amount and handled the actual tax payment (since they'd be aggregating all of these various transactions for all of their users, and maybe get some benefit from scale there), but I guess I could see why they wouldn't want to be responsible for that (and how that would be affected by returns, etc).
That's what I expect will happen. Payment processors, such as PayPal, will compute the sales tax and add it to the customer's bill. The processor will actually collect and remit the taxes. Most states already allow retailers to keep a small percentage of taxes collected to cover the cost of collecting and remitting them. They could do the same for the payment processors and the system would be transparent to most retailers.
