AlanF:
I really need that ten grand by the way.
Until then, if you can back up (as in hard copy documents) the allegations you make above that:
1. The WTS invoices Mag & Lit shipments, including monetary amounts.
2. The WTS states that Mags & Lit will be withheld unless the Cong's account is "kept current."
THEN such documents should be forwarded to California's (and other states) Revenue/Taxation agencies for review. If the above situations can be documented, then it is my opinion that a State would rule that "sales" are occurring regardless of the disguises that are being used.
Tax law is different from other branches of the law which often ride on interpretation. Tax law is more black and white, and less likely to allow people to get away with "technicalities". Remember who nailed Al Capone's ass, when no one else could. If one State could be convinced to go after the WTS, and they succeed, the rest of the states would follow suit.
DO YOU HAVE THE EVIDENCE?