Tax Bite Imperils Amazon

"The consensus in the industry is that this is not a matter of if, but a matter of when," says Cowen analyst Jim Friedman.

And Amazon could have more at stake than any other retailer if the legislation passes.

The sheer volume of its sales -- Amazon had revenue of $11.5 billion in 2006 -- would make it more exposed to any new tax requirements than other companies.

Amazon also has gone to great lengths to keep this already large top line growing fast. And the company may absorb some of the cost rather than pass it off to customers entirely, says Paul Misener, Amazon's vice president of global public policy.

"We could share some of the costs because you can't pass them off entirely since there is the law of supply and demand," Misener says. "If prices go up, then demand goes down, and that would mean sales and revenue could go down."

But that could put pressure on Amazon's already thin profit margins. And the alternative -- raising prices for customers -- also could prove perilous by taking a toll on sales.

The legislation also could give the ever-expanding list of smaller sellers on the Internet an advantage over giants such as Amazon. Provisions in the bill exempt sellers with less than $5 million in sales the prior year from having to collect taxes, for example.