It’s ba-ack! Facing a $20 billion budget gap, California liberals in the state legislature are reviving a tax-hike plan targeting out-of-state, online retailers that has a diverse coalition of web entrepreneurs and business and political leaders fuming.

The proposal, mentioned during a California Senate hearing just last week, would force companies like Overstock.com to collect and remit to the Golden State sales tax where they advertise with California-based websites.

Supporters say it could add needed revenue to the Golden State’s coffers.

Opponents charge that deeming such out-of-state retailers to have “sales tax nexus” by virtue of advertising in the state would constitute a major tax hike that would worsen the state’s budget woes.

Furthermore, several prominent critics of the proposal contend that it could be unconstitutional.

Nonetheless, those tracking the debate say that Democrats in the legislature could attempt to push it through in the coming weeks and months, playing off of widespread concern about the state’s fiscal mess and inability to cover its financial obligations.

Just this month, Americans for Tax Reform (ATR) issued a letter to California legislators noting that a vote in favor of the plan, which was rejected by Gov. Schwarzenegger last year, would be scored by the organization “as a tax increase.”

Other opponents meanwhile are speaking out against the proposal, noting that California is unlikely to in fact collect additional tax revenue, should the plan move forward. In North Carolina, where such legislation was recently instituted, opponents say online retailers stopped advertising with in-state marketing affiliates, such as blogs and websites, rather than collecting and remitting the tax. That example has marketing affiliates themselves arguing that were this tax increase pushed through, not only would it damage their businesses, but it would actually have a negative, as opposed to neutral or positive, impact on the state budget.

Mattias Larsson of Marina Del Rey, California, who runs the website DefinitiveDeals.com, opposes the plan, arguing that his business “will be devastated by the sales/use tax nexus bill,” and adding that he paid “well over $50,000 in California personal income tax last year”–a tax bill that could be lower in future were retailers to yank ads from his site, as has occurred in North Carolina.

Ryan Owen of Santa Monica and Savings.com meanwhile believes that in addition to threatening California’s existing revenue stream from him business, were the proposal to move forward, it would threaten jobs. “Not only will the major merchants not collect the use tax for California, but 25,000 small businesses will suffer, hire less people and pay less income tax,” he said in a statement.

Taxation law and policy experts contend that the proposal may not even be constitutional.

In his letter to California legislators, ATR President Grover Norquist stated that “…current jurisprudence under the U.S. Supreme Court’s ruling in Quill v. North Dakota requires that a business have a physical nexus in a state in order for the state to compel that business to collect and remit sales taxes. However, this measure attempts to circumvent the Commerce Clause by presuming that a company has a nexus if business is solicited through a third-party advertiser in the state.”

The Tax Foundation also noted earlier this year that “Litigation over the constitutionality of Amazon taxes is ongoing, with scholars on the left and right disputing their wisdom and legality.” At issue, specifically, is whether forcing online retailers to collect and remit sales tax places an “undue burden” on them, with the Tax Foundation further arguing that were the plan instituted, “each retailer no matter how large or small [would have to] track 8,000+ sales tax rates and bases. Further, these constantly change and (contrary to common assumptions) are not aligned with even 5-digit zip codes, let alone 9-digit zip codes.”

That, opponents charge, may be the biggest reason why the proposal could prove a bust again in 2010. “Who wants to push through an unpopular tax increase in a state with 12 percent unemployment, when it will decrease revenue, risk jobs, and subject the state to charges that it is behaving unconstitutionally?” one political operative tracking the issue queried. “Even among Democrats, that looks like a bad deal.”