Sales tax cannot be collected from an out-of-state-retailer if there is not a location in your state.
So for instance; if you're buying from JoAnn's online, and you DO have a JoAnn's in your state (and your state also collects sales tax), you WILL be charged tax. If you are buying online and your state does not have a JoAnn's, you will NOT be charged sales tax... even if your state collects it.
That is why most of us do not pay tax on our online, out-of-state purchases.
If you physically make a purchase in a state that does collect tax, even if your home state does not; you still have to pay the tax (the retailer could of course, allow you NOT to pay, but that's on their heads; not yours). If you had it shipped to your home instead(not across international borders), you would not pay tax... depending on the first paragraph above of course.
The same applies if you make a purchase in a county or zip code in your state, for instance, that has a higher or lower sales tax; if you physically buy it at the higher tax zip code; you'll pay the higher tax. If you have it sent to the lower tax zip code; you'd pay THAT zip code's tax %. ...But you'd also most likely pay shipping.
Is that all about as clear as mud?!
But on to the original question, as far as refusing to buy in-state? Absolutely not. I'll buy if the customer service is good, prices are fair, and shipping is not outrageous!
BUUUT I have yet to find a good online retailer in MN that I wouldn't be able to go to in person, either, so it's kind of a moot point for me... Just wanted to help clarify the tax/no tax thing.