With the rapid growth of online sales, more and more brick-and-mortar stores are seeing their turnover eroded. Offline sales have shrunk further due to the impact of the new coronavirus outbreak. State governments are losing significant tax revenue collected from traditional physical retail stores, while government spending is increasing. Without making up for the lost tax revenue from online sales, local governments will suffer from a persistent fiscal deficit.

Following the landmark South Dakota v. Wayfair decision in June 2018, states have passed legislation targeting online sales (only five states currently do not collect sales tax). Simply put, a seller is legally obligated to collect and pay sales tax from buyers in a state even if the seller does not have a physical presence in that state, if the company's gross receipts and/or the number of transactions in that state reach a threshold set by the state.

Beginning in 2017, several states have also begun to create laws that impose tax collection obligations on online third-party platforms (Marketplace). Platforms such as Amazon, Ebay, Walmart, Newegg, Wayfair and others are legally responsible in several states for collecting and paying state sales tax from third-party sellers.

Economic nexus laws are the same for cross-border e-commerce and other online retailers. As cross-border independent e-commerce continues to grow and expand its sales, it is inevitable that states will strengthen their regulation of international e-commerce sales tax.