On Monday, the federal Advisory Commission on Electronic Commerce held its first meeting determine what recommendations it will make to Congress concerning taxation of Internet purchases. The 19-member panel -- comprised of federal, state and local officials and representatives of the private sector -- is scheduled to submit its report by April 2000.

Sales taxes are not collected now, due to a three-year moratorium imposed by Congress, expiring in October 2001. The moratorium riles state and local officials -- as well as traditional retailers who claim they are losing sales to their Internet rivals. Internet merchants claim imposing taxes could stifle Internet growth and drive Internet firms overseas.

• Complicating the debate is the fact that there are now more than 3,000 state and local sales taxes which governments count on for 36 percent of their revenues.

• Internet consumer sales were about $10 billion last year, but are expected to top $100 billion by 2003.

• Business-to-business sales were $43 billion last year and could amount to $1.3 trillion in 2003.

• The percentage of retailers selling over the Internet grew from 12 percent in 1997 to 39 percent last year -- but their Internet sales represented less than 1 percent of the $3 trillion retail industry.

The Constitution prevents states from taxing transactions beyond their borders. The Supreme Court has ruled that states cannot require out-of-state companies to collect sales taxes unless Congress passes a law allowing them to do so.

Source: Richard Wolf, "Billions of Dollars Hang Over Internet Tax Debate," USA Today, June 22, 1999.