California Tax Enthusiasts Target eBay Sellers

Last week, Capitol Confidential reported on a new scheme being pursued by California Democrats to force out-of-state, online retailers to collect and remit California sales taxes.

But in a new development, it is now being reported that the proposal has attracted support from Republican State Sen. Roy Ashburn, making it technically bipartisan.

In addition, while proponents have been arguing that if pursued, this tax maneuver will not hurt smaller, online retailers, Capitol Confidential has learned that the preferred language of some movers and shakers in fact fails to exempt smaller retailers and would draw a surprising category of those selling to consumers online into the California sales tax net: Out-of-state small and medium-sized businesses that market through eBay.

Those familiar with one proposal floated this week say it would exempt from the requirement to collect and pay out California sales tax retailers who advertise with or market through California-based websites and who have not sold $10,000 or more worth of goods in aggregate to Californians during the prior 12 months.

However, even in a rough economy, experts say many small businesses who sell through California-based eBay could exceed that threshold.

If that is correct, such individuals speculate that it could hurt eBay, a big employer in the state, in addition to about 25,000 small online advertising businesses who carry ads by the likes of Amazon.com and Overstock.com.

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