PIERRE - Millions of Americans, knowingly or not, evade taxes every day on purchases made over the Internet or from mail-order firms across state lines.

Although the courts and Congress have refused to let states force companies to collect sales taxes on interstate transactions unless the firms have a physical presence in those states, consumers nonetheless owe the taxes.

"We're talking tax evasion. It's pure criminal behavior in every state with a sales tax," said Scott Peterson, executive director of the Streamlined Sales Tax Governing Board, headquartered in Nashville, Tenn.

Research by the University of Tennessee indicates that states and local governments are losing huge amounts of revenue from untaxed online and catalog purchases.

Internet transactions now total close to $2 trillion a year, said William F. Fox, director of the Center for Business and Economic Research at the university. Most of that commerce involves businesses selling to other businesses, he said, while about 5 percent of the value of online purchases, or more than $93 billion in 2005, involved retail sales to individual consumers.

Use taxes, an offshoot of the sales tax in the 45 states that have such taxes, are due on most Internet and catalog purchases. The tax is owed on merchandise that is purchased for use, consumption or storage within those states.

Only Alaska, Delaware, Montana, New Hampshire and Oregon do not have state sales and use taxes.

States not only collect sales taxes, but so do many others governments, such as cities, counties, school districts, transit districts and sports stadium districts.

While most businesses selling to other businesses pay use taxes on products shipped across state lines, few individual consumers do, Fox said. State and local governments stand to lose an estimated $21.5 billion to $33.7 billion in tax revenues next year, he said.

"The tax has been due forever, and it's not good when people don't comply with taxes," Fox said. "If we create this, 'I'm not going to pay my taxes mentality on sales taxes,' will that ultimately spread to other taxes? I don't think it's in our country's best interests to erode a general willingness to pay taxes."

The U.S. Supreme Court ruled in 1992 that states don't have the power to enforce sales tax collections on remote purchases. But the court said Congress could pass a law to allow those collections. Efforts to gain such a law have languished in Congress for years.

The endeavor, however, was ramped up when the Streamlined Sales Tax Project was created in 2002. State revenue officials started working on the project in 1999 at the urging of the National Governors Association and National Conference of State Legislatures. The two national groups - worried about the viability of the sales tax system in an Internet world - said a simple system must be devised to allow online and mail-order businesses to easily collect the tax.

SSTP officials have since developed uniform legislation that's been adopted by 15 states; seven other states have complied with most of the conditions and are associate members of the project.

Member states include Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, Rhode Island, South Dakota, Vermont and West Virginia. Associate members include Arkansas, Nevada, Ohio, Tennessee, Utah, Washington and Wyoming.

Although much of the streamlining and simplification of model tax regulations has been completed, deciding how to deal with differing rates in thousands of localities has escaped the group so far, Peterson said. Unless that issue can be resolved, forward momentum is stalled, he said.

Linda Krog, who works as a secretary in Pierre, said she shops on the Internet for merchandise that cannot be found locally and would not mind paying the sales tax on those purchases.

"I'm going to have to pay taxes in a store here, so if I can find something different in an online store and pay taxes, it doesn't bother me," Krog said.

Peterson said Congress is not likely to allow states to require tax collections on remote purchases unless there is agreement on a simple method for Internet and mail-order businesses to determine the taxes due in each state, including the various local rates. There are more than 7,500 taxing jurisdictions in the 45 states, he said.

Until more states can be persuaded to join SSTP, chances are slim of getting Congress to allow remote taxation, Peterson said. He continues to press nonmember states to join, but he said the task has been difficult because joining means those states must revise their sales tax laws to comply with the uniform agreement.

Many state officials have balked at doing that, Peterson said.

"If you don't have the political will to change your own laws, don't expect some other politician in Washington to have the political will to change the law," he said. "How do you get members of Congress to bless this thing if their own states aren't members?"

Adopting the uniform legislation may make some currently untaxed transactions taxable in some states, and that has caused officials in those states to withhold their support for the multistate agreement, Peterson said.

"For them to vote on this, this is a tax increase," he acknowledged.

SSTP member states must agree to tax rates that apply at the place where customers reside or where they take possession of products, he said. In many nonmember states, taxes are collected at the rates where the businesses are located, Peterson said.

Online retail giant Amazon.com Inc. has said it is willing to work with state and federal leaders on a remote tax, but it will only start collecting the taxes if the system is simple and fair.

The Direct Marketing Association, which represents an array of businesses that make remote sales, opposes taxes on those transactions because of the red tape that would be involved and the complexity of keeping up with tax rates in several thousand locations, said Mark Micali, DMA vice president of government affairs.

"If ever there is going to be a mandated sales tax collection, the states ought to get together and have one rate per state for all commerce, whether you buy it over the counter or the Internet," Micali said. "That would be a simplified system."

Micali said businesses also worry that being subject to state and local taxes on remote sales also could lead to being audited in all of those jurisdictions. That would be a logistical and financial nightmare for merchants, the DMA official said.

"If you're trying to market across the country, if the states want this authority and force someone over the state line to not only collect taxes but be subject to audit, they ought to make it pretty darn simple and straightforward," Micali said.

Cities have various tax rates, and having one rate for each state and then trying to decide how to divide collections among local governments is not acceptable because many of them could lose revenues, said Yvonne Taylor, executive director of the South Dakota Municipal League. Cities need the flexibility of adjusting their sales taxes according to revenue needs, she said.

"We don't want to be taxing any more or less than a local entity thinks it needs," Taylor said.

She does not agree that it would be difficult for retailers to know the rate of state and local taxes to collect on purchases to customers in those places. Computer software makes that feasible, Taylor said.

"The technology is there, and I think it's a shadow game to say it's not possible," she said.

States and local governments cannot continue to lose revenues from remote sales, Taylor added. It may be necessary to take the issue to court again in hopes of getting a favorable decision, she said.

"I don't know if we can wait on Congress to act," Taylor said. "I've pretty much given up on Congress."

Brenda Hardwick, a teacher's aide in Pierre, said a tax on Internet purchases may cause her to buy less merchandise online.

"That would probably make a difference in how much I would buy," she said.

But Hardwick said she would not oppose such a tax.

"It's only fair because I have to pay it for other purchases I make," Hardwick said.

The National Retail Federation, the world's largest retail trade group, and nearly 100 large merchants and retail trade organizations recently sent letters urging Congress to pass legislation allowing states to require remote sellers to collect sales taxes. Among the big players that signed the letter were Wal-Mart, J.C. Penney, and Kmart.

"Brick-and-mortar retailers are currently required to collect sales taxes while many online and catalog retailers are not," the letters say. "This is not only fundamentally unfair to Main Street retailers, but is costing states and localities billions in lost revenue. This threatens vital public services, including health care, education and public safety."

The legislation, which would exempt businesses with annual gross sales of less than $5 million, would let states that belong to the SSTP require out-of-state merchants to collect taxes on items sold to residents of those states.

More than 1,000 companies already collect those taxes voluntarily for SSTP states and have provided them with $125 million in revenues since the compact went into effect in 2005.

South Dakota has so far received nearly $1 million in those voluntary revenues.

Jane Page, assistant business tax director in the state Revenue Department, is a delegate to the SSTP. She thinks the odds are no better than even that Congress will approve tax collections on remote sales.

"It is a difficult road," Page said.