Even though most states administer a use tax to supplement sales tax collections, few report it on their returns.

A recent report estimates only about 1.6 percent of taxpayers report use tax on their income returns. Collection rates and methods vary by state, shown in the map below.

When consumers do not pay sales tax on Internet transactions or purchases made in other jurisdictions, they are liable for use taxes at the state sales tax rate plus any applicable local taxes. Internet retailers are not required to collect tax unless they maintain a physical presence in a state and states have little means of enforcement.

A University of Tennessee study estimates state and local governments nationwide will lose at least $11.4 billion in potential use tax revenues from e-commerce sales for tax year 2012.