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Amazon Fights For Privacy of Customer Records
suraj.sun notes a CNET article on Amazon's lawsuit against North Carolina on the grounds that the state is trying to violate the privacy and First Amendment rights of Amazon's customers. "Amazon.com filed a lawsuit on Monday to fend off a sweeping demand from North Carolina's tax collectors: [for] detailed records including names and addresses of customers and information about exactly what they had purchased. ... North Carolina's Department of Revenue had ordered the online retailer to provide full details on nearly 50 million purchases made by state residents between 2003 and 2010. Because Amazon has no offices or warehouses in North Carolina, it's not required to collect the [state's] 5.75 percent sales tax on shipments, although tax collectors have reminded residents that what's known as a use tax applies on anything 'purchased or received' through the mail." Amazon is arguing that the records of what books, music, and videos its customers bought deserve enhanced protection.
Not that this is an excuse, but because the NC government won't play triage with projects and cut what it can tolerate so the budget is experiencing a shortfall again in the billions.
Not paying an unconstitutional tax on interstate commerce—the regulation of which is expressly limited to Congress—isn't "skirting the law", it's "doing your duty as a citizen of the country".
Benford's Corollary to Clarke's Law: "Any technology distinguishable from magic is insufficiently advanced."
...but I can't imagine why in hell the revenue department should know what particular items were purchased by each customer. If they're worried about losing revenue then their focus should be limited to the monies paid only; gathering data on which specific xbox games that Cleetus T. Carolina purchased during the tax year seems irrelevant.
I sincerely hope Amazon wins, but it seems to me that without some kind of federal-level intervention, more and more states are going to push to get online / mailorder merchants to collect their taxes.
Amazon's big enough that if push came to shove, they could probably implement a sales tax system based on delivery address that could cover all 50 states and the territories.
However, what really scares me is that this would be a death blow to a lot of smaller online and mail order retailers. I built a catalog and shopping cart system for a friend who had a business model that just didn't quite fit existing off the shelf models, and I have to say that I do not relish the idea of having to build in a system for 50+ different sets of taxes. However, that task is childs-play compared to the accounting nightmare my friend would have in having to fill out forms and remittances to all those different jurisdictions. She gets by, but doesn't exactly have a huge margin... the extra complication of collecting for all those jurisdictions and time/effort needed to deal with it could tip the scales on whether her business continues to be profitable or not.
So, this isn't really about one state being greedy - it's about the camel's nose under the tent.
Sooner or later, someone will suggest that the federal government charge some modest tax (say 5%) on all online / mailorder sales, then distribute the funds to the states based on their share of the delivered sales.
Of course, the federal government would probably not be able to resist getting THEIR hands on the money and we'd either end up with an insane rate with the federal government back-dooring a national sales tax in, or the states complaining that the rate needs to be higher since they're still "losing money" versus collecting their full state sales tax.
This is just an ugly situation all 'round.
Personally, I would think that the success of online retailers is at least partly due to the largely tax-free nature of sales transactions. I doubt we'd see sales taxes kill e-commerce, but I can see it hurting small e-tailers and having a bit of a downward pressure on sales as it'll be eating into the spending power of the buyers.
The Digital Sorceress
There is also the nuclear option: Amazon refuses to ship to North Carolina, owing to the higher costs of compliance.
--Obyron