SACRAMENTO – Legislation requiring online and out-of-state retailers like EBay, Etsy or Amazon to collect sales taxes like local brick and mortar California businesses passed its first committee on Monday.

Sen. Mike McGuire, chair of the Senate Committee on Governance and Finance, Assemblywoman Autumn Burke, chair of the Assembly Committee on Revenue and Taxation and California Treasurer Fiona Ma are partnering on AB 147 – which implements the United State Supreme Court decision in South Dakota v. Wayfair Inc.

This decision authorizes states to begin collecting sales and use tax from online and out-of-state retailers without a physical presence in California.

AB 147 allows California to correct the competitive advantage out-of-state businesses, who did not collect tax, had over California retailers, who did. This inequity can give a big edge to online retailers over small businesses.

“A one-size-fits-all approach modeled after South Dakota law is not necessarily appropriate for a state with 40 million residents,” said Assemblywoman Autumn R. Burke (D-Inglewood) said Monday. “Today’s passage of AB 147 out of the Assembly Committee on Revenue and Taxation demonstrates the willingness of legislators and stakeholders to implement a thoughtful application of the Wayfair decision in California that creates a level-playing field for small and large businesses. We look forward to ushering this critical piece of legislation through the process so that all businesses, in and out of state, have a clear understanding of the changing dynamic of California’s e-commerce sector.”

“The Wayfair decision is one of the most important Supreme Court decisions in recent memory because it removes the competitive advantage online and out-of-state businesses, who did not collect sales tax, had over brick and mortar California retailers, who have always collected taxes. Local mom and pop businesses across California have been clamoring for relief for years and this legislation levels the playing field and not only implements Wayfair effectively, but also fairly. We are grateful to partner with Chairwoman Burke and Treasurer Ma on this important legislation.”

“As we all know, more and more consumers today have turned to online shopping, but our laws don’t reflect this shift. The passage of AB 147 out of Committee today furthers our efforts to close this loophole that currently puts small and brick and mortar businesses at a disadvantage in California while bringing approximately $1 billion in much needed revenue to our state and local governments,” said State Treasurer Fiona Ma, CPA.

AB 147 passed the Assembly Revenue and Taxation Committee Monday afternoon with a 10 to 0 vote.

Thirty three states have already implemented the Wayfair decision, with every other state with a sales tax expected to follow.