Skip to comments.Amazon's suit vs. North Carolina about preventing e-commerce witch hunt
Posted on 04/20/2010 8:50:08 AM PDT by RicocheT
Amazon has filed a lawsuit against North Carolinas Department of Revenue to prevent the state from getting the names of every resident that bought anything from the retailer since 2003. The ramifications could be huge.
As you may recall, Amazon has been dueling with a few states over taxation issues. States, which are struggling to balance bloated budgets, are mulling over taxing out-of-state Internet retailers.
The Amazon complaint could be alarming for those of us trying to think ahead a few steps. In Amazons complaint, the company said:
The North Carolina Department of Revenue (the DOR) is demanding that Amazon turn over the name and address of virtually every North Carolina resident who has purchased anything from Amazon since 2003, along with records of what each customer purchased and how much they paid. If Amazon is forced to comply with this demand, the disclosure will invade the privacy and violate the First Amendment rights of Amazon and its customers on a massive scale. But the DOR does not need personally identifiable information about Amazons customers in order to audit Amazons compliance with state tax laws.All it needs to know is what items Amazon sold to North Carolina customers and what they paid, and Amazon has already provided that information to the DOR.
Add it up and Amazon is seeking an order outlining that the actions of the North Carolina DOR violate the United States Constitution, the Washington State Constitution, and federal law.
(Excerpt) Read more at blogs.zdnet.com ...
A state can put a line on its income tax form to ask state residents to pay a sum to reflect sales tax on Sales and use tax due on out-of-state purchases. An honest tax payer would divulge the sum. Wisconsin asks that question on line 36 and I've put a fair estimate amount there for years.
NC ping please?
>>A state can put a line on its income tax form to ask state residents to pay a sum to reflect sales tax on Sales and use tax due on out-of-state purchases.<<
Washington state is a little trickier. Since we have no income tax and only a sales tax, there is no form to fill out. And in that sentence is the kernel of why I would like to see the federal income tax replaced with a federal state tax: No form to fill out and you enjoy the same privacy and anonymity Washington state’s sales tax affords.
What is interesting is that Amazon (I believe) doesn’t have ANY actual business holdings in the state of North Carolina. Essentially, NC is asking to review the financials of a company for which it has no jurisdiction or oversight authority.
Vermont also asks residents to voluntarily report any taxes owed on internet or mail-order purchases.
In Illinois, if you register a car and they see you bought it from out of state you’re going to get a tax bill for the difference in what you paid in tax there and what you would have paid if you’d bought it in your home juristiction in Illinois. There’s also a “use tax” form on their income tax form that asks you to report and pay taxes on any out-of-state purchases.
There was a story from last year that detailed a resolution that was being considered by the Massachusetts legislature that would demand that merchants in New Hampshire (or, it might have been RI) ask for proof of residency from their customers, and then collect the MA sales tax from the customers that were actually from MA.
Yes, you read that right - MA wanted to pass a law demanding that NH retailers do something. That's how crazy they are in MA. Of course, NH told them to go (%*^& themselves, as they should have.
We own a boat that we used to sail up to Lake Erie from FL. We're part-time Ohio residents. But, OH's department of taxation began sending agents to marinas and started documenting the boats that were in the marina. If they had an out-of-state registration, but were registered to people who lived in OH (even if they were only part-time residents), those people would get use-tax bills from the state.
As a consequence, we no longer take our boat to Lake Erie anymore. Who loses out? The state of Ohio because we no longer pay the marina operator for dockage, or fuel, or supplies. We no longer pay the riggers or local laborers who work on or service of boat. Everyone loses all for the sake of Ohio trying to maximize tax revenues - they can't see the forest through the trees.
The same thing happened in Maine some time ago. As a result, a fair number of people stopped cruising in Maine waters.
That’s one reason why the federal income tax system is so destructive—and why the big government types have continued to concentrate power there, away from the states and localities. If a town or a state goes berserk, you can always go elsewhere; but you can only escape your Socialist Uncle Sam by leaving the country.
So, they can come after NC folks for back taxes on items purchased on Amazon? Good grief, I live here and have bought from Amazon for years. OMGosh.....what next?
>>What is interesting is that Amazon (I believe) doesnt have ANY actual business holdings in the state of North Carolina. Essentially, NC is asking to review the financials of a company for which it has no jurisdiction or oversight authority.<<
This. I think you have essentially nailed it. I wonder, though, how the state of NY successfully getting tobbacco tax info on people who bought mail order cigarrettes would play into this. Come to think of it, I think Washington state did the same thing.
And I believe they were successful at billing the residents for unpaid tax.
How far will they go? Demand I send sales tax for each basket of peaches I buy in SC? If I stop at a garage sale in TN do I need to keep a running tally for next year?
Back when owners of vehicles in Washington state were charged annual license fees based on the value of the vehicle, the State Patrol got real creative.
For background, Oregon had no (or very minimal) fee, while expensive cars, etc. could have an annual license fee of thousands of dollars, back when dollars were significantly more valuable.
What the troopers did was, at the beginning of Memorial (or Labor) day weekend, they took down the license numbers of all the motorhomes leaving washington state but with Oregon plates. Then, at the end of the weekend, they took down all the license numbers of the motorhomes entering Washington with Oregon plates.
Then they nailed them for the license fees.
>>So, they can come after NC folks for back taxes on items purchased on Amazon? Good grief, I live here and have bought from Amazon for years. OMGosh.....what next?<<
And to ask a rhetorical question, do you think this information, and the thought process you reveal, will impact your future Amazon customer activity?
...Which I think is the state’s goal.
Good point. Of course, tobacco is a regulated product, like liquor. I suppose the argument could be made that the state has an explicit interest in determining the identity of the recipient of controlled/regulated items in the state, regardless of the origin of such items.
I'm not sure such an explicit interest could be asserted for the kids of items that Amazon sells - books & CDs. Then again, courts have given (mistakenly) tremendous latitude to both state and federal governments in furtherance of collecting taxes & revenues. I'm sure this will be no different.
These are oppressive tactics that I refuse to comply with. I often drive to Wisconsin and buy items to avoid Illinois taxation (especially Cook county and Chicago taxes) and I will NEVER fill out a use tax form. My accountant says let them try to prove it, screw democrap governments.
About 25 years ago my uncle built a really nice house in eastern Washington state. When it was time to furnish it he took his huge car trailer to Portland (not that much further away than Seattle, from where he lived) and stuffed it with televisions, furniture, washer, dryer, kitchen appliances, you name it. All sales tax free.
He saved, I am guessing, thousands in sales tax.
And is anyone surprised that the sales tax in the part of Washington that abuts Portland is several points lower than the rest of the state. Ah, competition and it’s rewards.
“And to ask a rhetorical question, do you think this information, and the thought process you reveal, will impact your future Amazon customer activity?”
No, you can't. Not any more.
If they pull this, the victims need to make it "revenue neutral".
The same North Carolina DOR that’s been sitting on my $725 tax refund for TWO MONTHS now. Yeah. Those guys.