EBay rallies users to fight Internet sales tax

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The company also sent similar emails to the site's buyers and employees. The emails began going out on Sunday and will continue over the next several days, the company said.

The emails urge users to contact their members of Congress to voice their opposition to the proposal.

Supporters of the bill, The Marketplace Fairness Act, argue it would close an unfair loophole that benefits online retailers over local brick-and-mortar stores.

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do.

The Marketplace Fairness Act would empower states to tax out-of-state online retailers but would exempt small businesses that earn less than $1 million annually from out-of-state sales.

EBay is pushing to expand the exemption to cover all businesses with less than $10 million in out-of-state sales or fewer than 50 employees. 

Traditional retailers along with online giant Amazon are lobbying aggressively for the legislation.

Amazon reportedly has plans to expand its network of physical distribution centers, which would make it subject to state sales taxes under current law.

In a statement provided by the bill's advocates, Hector Barreto, a former head of the Small Business Administration, argued that eBay is making a "last minute push to protect a government-sanctioned subsidy for a handful of multi-million dollar sellers."

"The fact of the matter is hundreds of thousands of small businesses on Main Street stand to lose if Congress works to preserve the special treatment eBay is advocating for," he said. "The Marketplace Fairness Act protects true startup small businesses and ensures a level playing field for all retailers.” 

Last month, 75 senators voted for a nonbinding budget resolution amendment expressing support for allowing states to tax online retailers. Although the vote had no legal impact, it was an important demonstration of support for the legislation.

Although the bill looks to be on the fast-track for passage through the Senate, it faces a tougher battle in the House, where Judiciary Committee Chairman Bob Goodlatte (R-Va.) says he plans to take his time scrutinizing the legislation.