April 20, 2010
If you buy a lot of things online, you might want to keep an eye on a court case against North Carolina, where Amazon.com is resisting the state's demand that it turn over its sales records.
Amazon, and most other online retailers, don't collect sales tax on their sales. Many states, including North Carolina, require their citizens to report their online purchases on their state tax return and pay the sales tax then. Almost no one does.
In times of prosperity states were willing to let it slide, but increasingly, cash-starved state governments are looking for revenue anywhere they can find it. North Carolina and a handful of other states think online shoppers living within their borders should pay up.
Amazon said it already provides North Carolina's Department of Revenue with information about its sales within the state. It says the information includes the date and total price of the transaction and the Zip Code where it was shipped.
The state says that's not good enough, and last month threatened Amazon with civil contempt if it did not also provide the names and addresses of the North Carolina residents making the purchases.
Amazon.com has filed suit against the North Carolina Department of Revenue claiming the demand for sales data on every North Carolina resident who has purchased something from the company since 2003 is both unreasonable and an invasion of privacy. Much of the sales cover digital downloads.
"The DOR has no business seeking to uncover the identity of Amazon's customers who purchased expressive content, which makes up the majority of the nearly 50 million products sold to North Carolina residents during the audit period," the company argues in its suit, Amazon.com LLC vs Kenneth R. Lay, filed in U.S. District Court, Western District of Washington.
If Amazon loses its suit, it will likely have to turn over the sought-after records to North Carolina. Citizens of the state who made online purchases and did not report it on their tax return would not only have to pay the taxes, but could face penalties as well. Consumers who make online purchases could also soon be presented with a tax bill from their state, demanding sales tax on all previous online purchases.
