Amazon Prevails In State Sales Tax Dispute, Thus Far

snsh writes "A US judge has ruled for Amazon.com (PDF) against North Carolina's request to turn over the names of its customers to state tax officials. The ruling was focused on privacy grounds, so the state can still re-request less detailed sales data which does not identify items purchased." Reader arbitraryaardvark adds a link to The Volokh Conspiracy's take on the decision.

Comments

Good for us Sellers

[commodore64_love]

The outcome of this case affects not just Amazon, but also its sellers.

"No taxation without representation" is the principle. Why should I be subject to taxation by a foreign government (Carolina) when I have no voice in their legislature? It makes as little sense as saying a Frenchman should have to pay income tax to the Polish government. My allegiance is to MD and US..... any other governments have zero authority over me.

Re:Good for us Sellers

[Zironic]

Sure they don't have any authority over you (unless your government says they do and extradites your ass) but they do have authority over anything you do in their territory, like transferring goods.

Re:Good for us Sellers

[JustOK]

I think we should tax all foreigners not living in this country.

Re:Good for us Sellers

[cheesybagel]

In the EU they charge VAT according to the rate of the country where the destiny of the goods is.

Re:Good for us Sellers

[cowboy76Spain]

The outcome of this case affects not just Amazon, but also its sellers.

"No taxation without representation" is the principle. Why should I be subject to taxation by a foreign government (Carolina) when I have no voice in their legislature? It makes as little sense as saying a Frenchman should have to pay income tax to the Polish government. My allegiance is to MD and US..... any other governments have zero authority over me.

Nonsense.

The taxes are paid by the customers, not by the sellers. As the customers reside (and purchase) in the state, they must pay.

Notice also that TFS does not say anything like that... it just says that the state has no right to know if someone bought "Alice in Wonderland" or "How to make home bombs" or "Meth cooking for dummies". I think it is a good point to defend, but the issue of taxation itself has not been reviewed, as it is emphasized in the summary.

Also, I'd like to play a little with your "No taxation without representation". Are you suggesting that when a convinted felon loses his/her right to vote, s/he also loses his/her duty to pay taxes? Maybe crime pays, after all.

So... any comments other than "I do not like to pay taxes"?

Re:Good for us Sellers

[RivenAleem]

I think I speak for all foreigners when I say that America is already very taxing.

Re:Good for us Sellers

[redhog]

Why should convicted felons lose the right to vote? What really is the point? Once the sentence is served, the convict should be considered a free man again, with the same rights and responsibilities. If that is deemed inappropriate, he should still be in prison. Why have second class citizenship?

Re:Good for us Sellers

[nosferatu1001]

Agreed. One of the more bizarre laws the US has that seems certain to incite continual negaitve feelings towards a government you can never participate in.

Utterly stupid

Re:Good for us Sellers

[commodore64_love]

>>>No, this principle is that one state may not tax the residents & businesses of another state, or force the residents & businesses of another state to comply with its laws.

No?
Isn't that what "no taxation without representation" means?
Residents of other states have no voice in NC's legislature.
Therefore NC has no authority over them.

Re:Good for us Sellers

[mysidia]

like transferring goods.

Conducting business transactions and transferring goods to someone out of state is called interstate commerce. And the supreme law of the land says that the power to regulate interstate commerce belongs exclusively to the US congress, and specifically indicates that states do not have the power to lay tarrifs, duties, imposts, or otherwise tax imports.

In other words.. no... the foreign state doesn't have authority or power to regulate you transferring goods into their state; that authority has been explicitly reserved for the feds.

Re:Good for us Sellers

[nedlohs]

How exactly does whether Amazon has to send details of NC customers to the NC government affect sellers? And how does it have anything to do with you being subject to taxation?

Sure NC is trying to do that, but this particular ruling has nothing to do with it at all.

Re:Good for us Sellers

[nedlohs]

No, since you put all those purchases on your state income tax return and paid use tax on them at the appropriate rate it won't affect you at all.

Re:Good for us Sellers

[mcgrew]

English motherfucker. Learn it.

LOL, you just called him an "English motherfucker."

Mr. pot, meet mister kettle.

Re:Good for us Sellers

[Chibi Merrow]

I live in a state where it's perfectly legal to sell someone an AK-47 at a gun show without even checking their ID

Which is a bald-faced lie. Fully automatic weapons require a Federal Firearms License, which overrides any more permissive state law regarding them.

Unless you're referring to a semi-automatic rifle that shares parts with an AK-47? If so, then why should you have to show an ID?

Re:Good for us Sellers

[Anonymous Coward]

No?
Isn't that what "no taxation without representation" means?
Residents of other states have no voice in NC's legislature.
Therefore NC has no authority over them.

That isn't the point. If Amazon actually charged the NC sales tax, Amazon would have to remit the sales tax revenue to the government of NC. Amazon would not keep the tax. Amazon would not pay the tax, it is the customers in NC that would pay the tax. Amazon would simply be the tax collector.

The point is the government of NC does not have the legal authority to force an out-of-state company to become a tax collector for NC.

That is interstate commerce, which under Article I, Section 8, Clause 3 of the US Constitution falls under the control of the US Congress, not the government of NC:

[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;

Re:Good for us Sellers

[gtall]

Just to be a prick, if you are a firm retail stores in 50 states, you must keep up with 50 state laws. Internet retailers are no different. We have computers to figure out the tax, take the money from the credit card companies, and pay the internet retailers' current tax bill. I admit it will cost them some money to get the changes in their systems which will handle the state taxes. The real problem is not going to be places like Amazon which can afford the expense. The real problem will be Ma and Pop internet sales. This will be a new problem since Ma and Pop previously were very local.

Requiring states to keep up with the deluge of data is also an expense to be born by the taxpayers as the states' systems will need to be upgraded. And it will be a continuing expense since they'll then have to keep records of every internet retail transaction. New internet stores pop up and go bankrupt all the time, that will also make things more complicated.

Between the two sets of problems, I tend to think the first is easier to solve. And I don't think it is an answer to say that no internet sales tax should be charged because it puts brick and mortar stores at a disadvantage. Also, many states have their finances built in part around sales taxes.

Another way to go is for the Federal Government to institute country-wide sales tax for internet purchases. Then it must disburse the proceeds among the states according to some formula. Maybe use the states' current tax rates to apportion the pie. That would at least centralize the problem...and open more political problems. But there's a solution to that too, shoot the politicians.

Re:Good for us Sellers

[tompaulco]

...I don't think it is an answer to say that no internet sales tax should be charged because it puts brick and mortar stores at a disadvantage. Also, many states have their finances built in part around sales taxes.
Brick and mortars already have a disadvantage of having to maintain inventory and an expensive storefront. Lack of Internet sales tax would not be an issue to them if people would pay their use tax.It's not the internet creating the problem, it is the citizens.
It is not some company in Iowa's responsibility to make sure that I pay my Oklahoma Use Tax. That is Oklahoma's responsibility.
The big problem is that it would cost more money to make sure people paid their Use Tax then they would actually receive from Use Tax. That is why they haven't been rigorously enforcing it. But if they can get some other poor shmoe who has no representation in this state to collect it for them, then they are all for it.

Re:Good for us Sellers

[tompaulco]

They are not taxing YOU, idiot, they want to tax your customers in NC territory which they are completely in the right to do...
That is correct, and I encourage them to do so, but they can't ask me to collect that tax for them because I am not subject to their laws. Now, if they were to allow me to keep part of that sales tax to compensate for my effort in keeping track of their laws, then that would be a matter. Something on the order of 500% would be appropriate, to deal with all of the taxing districts in their state.

Re:Good for us Sellers

[DigitalSorceress]

Absolutely.

I host an online store for a friend - she used to set up booths at conventions and such but due to health reasons, she is now completely online. (used to do mail order too as it was a niche product, but nobody does mail order anymore). She's having enough trouble just complying with PCI standards. She freaked out when she first saw the questionnaires and I had to spend quite a bit of time going through it and explaining what was meant and spent a lot of time tweaking server and application to meet the PCI standard (it asks for mostly common sense stuff, but is worded with some absolutes that mean that a technically secure compensating measure doesn't qualify you to answer YES/NO to a given question, but I digress)

The point is that she's a friend and I essentially put in quite a few billable hours pro-bono. However, PCI compliance was a walk in the park compared to what we'd have to do should she be required to deal with all those tax jurisdictions you mentioned. She would not be able to afford it with her sales and I'm at my limit (even with a friend) for how much time I'm willing/able to give away.

I custom wrote her shopping cart and checkout system, and before anyone says it, at the time I wrote it, there was NOTHING available on the market that met her needs and she could afford.
  YES we could probably rebuild her site using something commercial or FOSS today, but she still can't afford what it would cost to do the conversion. In my opinion, such a complex mess of tax jurisdictions would force mom and pop type places offline or force them to pay big vendors for their carts/checkouts.

That might not seem like the end of the world, but it feels like yet another barrier to entry... over time, the more regulatory and statutory hurdles businesses and individuals have to negotiate in order to go online will destroy a lot of the freedom and openness that made the Internet so fertile a place for speech and innovation in the first place.

Re:Good for us Sellers

[BlueStrat]

...over time, the more regulatory and statutory hurdles businesses and individuals have to negotiate in order to go online will destroy a lot of the freedom and openness that made the Internet so fertile a place for speech and innovation in the first place.

If you happen to be a Progressive/Fabian Socialist as many on the Left in US politics and the current administration are, this is a desired design-target result/feature.

Strat

Re:Wait! Don't tech companies love Big Brother?

[Chaos Incarnate]

There's a difference between seeking to avoid paying their taxes (finding shelters, etc. like Google), and refusing to help the state violate the interstate commerce clause (like Amazon is doing here).

Re:Ammend the constitution already!

[dakameleon]

Amend the Constitution? Inter-state federally administered taxes?! Good luck getting that through in the current political climate.

Huh..

[EasyTarget]

I must be mis-reading this..

As far as I can tell, all that has been ruled is that the state should not receive a lit of -what- books you have purchased.

Nothing to prevent them knowing the value of the books you have purchased, with the titles redacted, so you can pay your fair share of taxes like the rest of us.

Yet people here seem to be discussing things off at a tangent to this (like whether books should be taxed at all, a totally different subject really), who would have imagined Slashdotters doing that ;-)

Re:Ammend the constitution already!

[commodore64_love]

Why not? We've passed many amendments, including stupid ones. Like the banning of alcohol. How in the world that ever managed to get 75% support is a mystery.

Besides amending the Constitution IS the proper method of extending the US Congresses' authority. Otherwise laws will be nullified by the 10th amendment. (Powers not given to the US are reserved to the States or the People.)

Re:Conviced Felons

[BUL2294]

Whether felons have the right to vote & the restrictions posed on them is a state matter.

Only 2 states, Kentucky & Virginia, deny felons the right to vote for the rest of their lives, although Kentucky has a process to restore that right. Other states disallow voting for felons in prison, on probation, on parole, etc.--just depends on the state. Maine & Vermont allow felons to vote while in prison. Oddly, "felony disenfranchisement" laws have been found to be constitutional .

See http://en.wikipedia.org/wiki/Felony_disenfranchisement

A Little More Complicated Than That...

[ideonexus]

You are correct that things have gotten off topic, and a lot of people are missing what's actually going on here; however, it's not as simple as giving purchases with titles redacted...

Amazon is being sued to pay the taxes for purchases in North Carolina, not for everyone in America. They furnished NC's Department of Revenue (DOR) a list of all sales with ASINs (Amazon's Unique Identifier for products) from 2003 - 2010. NC needs the details because different kinds of products have different sales taxes. NC's DOR demanded that Amazon also provide the Bill-To and Ship-To information, which Amazon refused to do as this would violate the First Amendment by identifying the details of what NC residents were reading, watching, and listening to.

This is where it gets hazy... The DOR offered to give the original data back in exchange for data that identified people, but not the details of what they purchased, but the original data would be kept on the DOR Secretary's computer, because they needed some of that for... I dunno, it's hazy legalese. Amazon stated that the only way they have to identify what was purchased was ASINs, which would identify the products, so no deal.

The DOR admitted that this customer-identifying data would add nothing to establishing Amazon's tax-liability, but they still wanted it. Amazon got backing by the ACLU and the Judge ruled against the DOR.

This should be case-closed, but, as a resident of North Carolina, I'll be keeping an eye on it, and will be writing an irate letter to the editor of my local paper for not covering this story. Thanks Slashdot!

Re:A Little More Complicated Than That...

[spidrw]

Amazon isn't being asked to pay taxes at all. NC would certainly prefer that Amazon collect and pay them, but what NC wants is purchase details so that they can send tax bills to NC residents (you and me) for un-paid use taxes. Amazon has no NC tax liability - we do.

Re:Wait! Don't tech companies love Big Brother?

[commodore64_love]

>>>Because see, the way we actually track public opinion in this country is by having elections.

Not true. We also track public opinion via Citizens' calls to the Congressional representatives. In October 2008 the phones were overloaded with citizens saying, "Vote No on the bailout bill," and it passed anyway. Then the same thing happened again in the week prior to the Healthcare Reform Bill ("vote no") and it passed anyway. The calls were approximately 75% and 70% against these bills.

So the previous poster is correct. The Democrat-supermajority Congress is ignoring the constituents - you might as well not bother calling, because they won't listen anyway.

Re:Pork for the "red states".

[Lehk228]

http://img35.imageshack.us/img35/182/2994934040ca5b05d221.jpg

Re:Wait! Don't tech companies love Big Brother?

[mea37]

Use taxes don't violate the Interstate Commerce clause. Not even Amazon claims that. Here is a pretty good explanation of how state taxes interact with the Interstate Commerce clause. Note that a tax is illegal only if it discriminates against Interstate Commerce, and particularly note the heading Discriminatory Taxes May Be Valid as Complementary Taxes.

Re:What on earth are you babbling about?

[commodore64_love]

>>>what on earth are you babbling about?

Assuming the court allowed states to collect this info, I would be required to keep a list of all my customers in 2011, separate them, and mail-out 51 letters to the 50 states plus DC. That would require several days worth of labor on my part, and that is "taxing". I should not be taxed by governments where I have no representation in their legislature.