How much clearer than "They need to have a physical presence in the state to collect tax in that state" does it need to be...this whole redefining what constitutes a physical presence is BS...maybe they are just trying to get congress to act, or they are/were hoping that amazon would simply capitulate and go along with it.
"California's new law was drafted to circumvent a 1992 U.S. Supreme Court ruling that sellers can't be forced to collect sales taxes unless they have a physical presence in the state."
If Calif would get its entitlement spending under control...this probably would not have come up.
Putting aside the entitlement/spending issue for a moment, the 1992 decision (and the 1967 one that it reaffirmed) were from a different time in american economy and law. While reasonable minds do disagree, many people believe that the court's 1992 reliance upon prior law may no longer be appropriate given the drastic changes from a production/tangible property US economy to one that relies so much more upon services, intangibles, non vertically integrated supply chains, and massive cross border transactions. Back then, this was only an issue for the mail order business. There was no internet, little in the way of direct retail to consumers that was easily cross state borders, and little in the way of technology that would facilitate the ability of sellers to comply with the sales tax laws of > 7,000 jurisdictions (states, counties, cities etc).
Whatever congress does decide - it does need to decide. To say there isn't a real discrepancy between online vs B&M retail is false. Good tax and economy policy shouldn't be about picking winners and losers between otherwise similarly situated businesses. Under Article II of the Constitution, it's their job to clearly provide the rules of the game - when can states tax this type of commerce. Perhaps their inaction can be seen as tacit reaffirmation of the 1992 ruling. That's one way of looking at it.