1. E-commerce involves buying and selling of goods and services through digital communications and can be categorized into models involving physical delivery of tangible products, digital delivery of products, application hosting, and e-services. 2. Taxation of e-commerce transactions raises issues around international boundaries, losses of government revenue, and potential slowing of e-commerce growth. 3. Currently internet purchases are largely not taxed due to difficulties in determining tax jurisdiction and the intangible nature of some digital products, though some large retailers have begun voluntarily collecting taxes.