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In addition to all that's previously been stated, most states have a law that says they can collect state sales tax on an item you purchased in another state, which they may be trying to interpret across Internet sales as well. It's causing a big stink up where I live because a woman who lives in Bristol, TN had to go to Bristol, VA (same city split in half by the state lines) to buy some furniture because it was the only furniture store in town. A few months later she gets a bill for the sales tax from the State of Tennessee, who has a much higher sales tax rate (due to ZERO income tax, BTW). She didn't go to ole Virginny to save a dime, she went to the other side of the city because that's where the store was.
Here's the kicker: the end of her front yard is in Tennessee, but the fence of her back yard is along the Virginia border. If her house were 30 feet the other way this wouldn't have happened.
Long story short: I expect us all to have to pay local taxes on Internet purchases by the end of the year, including e-books.
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