Amazon has already terminated its relationships with affiliates in three other states—North Carolina, Rhode Island and Colorado—that have enacted legislation within the past year aimed at forcing online retailers to collect sales tax.
Just in case someone thinks that Amazon just doesn't like to collect sales tax at all, any marketplace transaction that Amazon completes on behalf of a California retailer to a California customer automatically collects California state sales tax and remits it quarterly to the state of California.
Amazon's rejection, however, is reinterpreting an advertising presence as being a physical presence. Note: One of the big pushers behind this is Buy.com which, being based in California, is fighting an uphill battle to stay competitive in California, as their prices are 10% higher than Amazon's at the final checkout because of the sales tax charges.
To put it into perspective, it is like California stating that any out of state company that uses a billboard advertisement is now based in California and subject to corporate taxes. It bends reality.