Amazon feud with states over sales tax turning ugly

The tentacles of Amazon are long, and many states that are suffering tax income shortfalls are itching to squeeze some money out of their state residents' online purchases from the behemoth. The problem isn't with the law, most of the time, but with the collection, and Amazon is caught between the desire to maintain its present structure and the desire to keep this price advantage. A bill under consideration in Connecticut that would require Amazon to collect sales tax on purchases by that state's residents has the company threatening to drop Connecticut partners from its site.

What's the issue here? The most common Amazon transaction, where you buy an item from its inventory, is pretty straight-forward. Amazon collects sales tax from buyers in those states where it has a physical presence: Kentucky, North Dakota, and Washington, as well as New York.