As if the regular state sales taxes aren't bad enough, an online sales tax could eventually become a heavy burden on your small business, especially if you pursue an e-commerce strategy. As internet sales have boomed over the last two decades, they now make up a big portion of all sales. But the regulatory waters for online purchases remain murky.

More than a dozen states are now considering imposing regulations that would enable them to collect a sales tax on goods purchased online within their borders, according to Fortune. These regulations would force businesses that sell online to collect an online sales tax from customers in the state. Here's an overview of the current regulatory situation and how it could impact you.

Physical Presence Rule

As the U.S. Small Business Administration (SBA) explains, "If your business has a physical presence in a state, such as a store, office or warehouse, you must collect applicable state and local sales tax from your customers. If you do not have a presence in a particular state, you are not required to collect sales taxes."

Back in 1992, before online retail began to take off, the U.S. Supreme Court ruled in Quill Corp. v. North Dakota that states could not collect sales tax based only on the delivery of goods into a particular state. The seller's business operations needed to have some physical presence, or "nexus," within the state as a precondition for collecting sales taxes. The Quill ruling's definition of a "physical presence" includes retail outlets, warehouses and in-state sales representatives.

Beyond Physical Presence

With the growing volume of online sales after the late 1990s, pro-tax state legislators began to attack the Quill decision as hopelessly outdated. The SBA recommends using online tools to calculate online sales tax: "Many online retailers use online shopping-cart software services to handle their sales transactions. Several of these services are programmed to calculate sales tax rates for you." These tools will also keep you updated on potential regulatory changes in the online tax space.

Continued Uncertainty

The takeaway is that the courts and federal government need to offer more legislative clarity so that small businesses can move ahead on a firmer footing when it comes to online sales taxes. It remains uncertain whether sales tax applies to some online sellers. As the Fortune article concludes, "Looking ahead, consensus on whether to collect e-commerce sales tax across the country seems far off."

In order to stay compliant, you'll need to check with your legal and financial advisers on a regular basis. It's also important for you to make sure that you're aware of any regulatory changes that are happening at the state and federal level.

Tags: Taxes Sales E-Commerce