Evan Schuman's StorefrontBacktalk

But it’s eBay that faces the biggest potential complications from Internet sales taxes—and the biggest IT investment. Right now, eBay doesn’t do any state sales-tax collection—it leaves that to individual sellers. And although it runs an auction service in California, where auctioneers are required to collect sales tax, it somehow manages to avoid doing the collection.

The auction site’s official position is that it opposes the proposed legislation because it’s looking out for small sellers that aren’t in a position to handle all the sales-tax complications that a new law would bring.

But it may be eBay, not sellers, that is required to collect sales taxes. In many states, auctioneers are required to collect sales tax. What happens if, for example, Texas decides that even though California doesn’t require eBay to collect sales taxes like other auctioneers, Texas does? The line of thought isn’t complex: If an online retailer in California has to collect Texas sales tax from Texas customers, just like Texas brick-and-mortar stores do, why shouldn’t an online auctioneer have to collect sales tax the way Texas auctioneers do?

The proposed federal law doesn’t single out online auctions one way or the other. That means while conventional E-tailers will know exactly what they have to do, eBay may be in for a series of Amazon-like legal battles with states over whether it has to collect sales taxes.

But unlike Amazon, eBay would have to do that sales-tax collection as a third party to each auction. That would require eBay to confirm both the location of each buyer (so it knows what locale’s tax rates to apply) and detailed information about each auctioned item (so eBay knows whether the item is taxable and which tax rate applies).

That’s all information eBay doesn’t currently collect. Although most big online retailers already have systems in place to collect at least some sales taxes, eBay would be starting from scratch—and with less control over what it’s collecting sales tax on.

How much of that data collection could be automated isn’t clear. Although eBay would probably tell sellers that they are responsible for identifying what category each item belongs to, eBay would still be running the auction—and responsible for the accuracy of the statements. And while eBay already spot-checks auctions for fraud and other problems, that doesn’t happen at anything like the scale required for this approach.

Could things get even messier? Sure. What if California decides that the auctions are taking place in California (where eBay is headquartered), so that state wants the right to collect the auction sales tax unless a buyer can prove the item purchased is exempt from California sales tax? The fact that California doesn’t currently require eBay to collect sales tax doesn’t mean it won’t jump in if that tax revenue is available but headed for another state. Then multiple states could be fighting—almost certainly in court—over who eBay should be collecting taxes for.

The “Main Street Fairness Act” doesn’t provide any answers there. It’s written with conventional retail in mind—which means even if an unconventional retailer is the size of eBay, it’s likely to be in trouble.

There’s one silver lining if eBay has to collect sales taxes on all auctions, though: Those small businesses that eBay says it’s trying to protect really won’t have to worry about all the sales-tax complications. That will be eBay’s problem to solve.