At some point the state agencies has to clamp down on people not paying taxes (known as a use tax) on their Amazon purchases. I know a lot of my friends purchase from Amazon because they save 8.5% in tax. It's significant when you make a purchase like a Macbook. That's a huge competitive advantage that Amazon currently has over other online retailers (at least for California).

Edit: Correction IRS => State agencies (thanks shrughes)