We "have been purchased at a price," this Sunday's second reading reminds us. State governments are thinking the same thing about items bought by their residents online, and the days of buying things tax free on the internet could be drawing to a close.

As the economy worsens and state budget deficits soar, an increasing number of states want online retailers to collect sales taxes on purchases made by their residents-even if the seller has no physical presence in the state, such as a retail outlet.

That development is sparking conflict with companies that do business online only and have enjoyed being able to offer sales-tax free shopping. One of the most aggressive states, New York, is being sued by Amazon.com Inc. over a new requirement that online companies must collect taxes on shipments to New York residents, even if the companies are located elsewhere.

The amount of money at stake nationwide is unclear; online sales were expected to make up about 8 percent of all retail sales in 2008. One estimate claimed that if Web retailers had to collect taxes on all sales to consumers, it could generate $3 billion in new revenue for governments.

Collecting online sales taxes is not as simple as it might sound. A nationwide Internet business faces thousands of tax-collecting jurisdictions--states, counties, and cities--and tangled rules about how various products are taxed.

A 1992 U.S. Supreme Court ruling said that states can't force businesses to collect sales taxes unless the businesses have operations in that state. The court also said Congress could lift the ban, which remains in place-for now.

Source: An article by Rachel Metz for the Associated Press