In a drop shipping situation who would pay the tax?
Every transaction is taxed in the state where 'use' takes place. That's why it's called Sales and Use Tax. State DOR's (Depts of Revenue) make huge money on sales tax audits catching people not paying their use tax.
Alot of people don't realize that when they purchase merch online where no sales tax was charged, they are still liable for remitting the sales/use tax to their state DOR. For individuals, it's never enforced. But if you're a business already registered with your DOR and they see that you're submitting returns every quarter - but that Use Tax section is always blank... They like to let that ride for the full 5-year lookback period, then stick you with an audit and double their money with penalties. So yeah, pay your use tax if you're a biz.
I can't imagine having to submit 51 separate returns each quarter/month. That's alot of bureaucratic bs to go thru. Just setting up the 51 accounts. No way! There has to be some sort of consolidation. Or then again, that's why the $1mil threshold. The big boys with an office in each state already have the 51 accounts in place.
As it is now, you have to setup a DOR account in any state where you have an office or "presence". Currently (for now), shipping to a state does not signify presence. And even if you do have that presence and setup a state DOR account, you still only collect and pay sales tax to that state for items that are shipped to or "used" in that state. Plus pay use tax for all items you yourself "use" in that state, where sales tax wasn't originally charged.