Amazon denies North Carolina’s request for tax-related information

North Carolina has raised the ire of online retailer Amazon by beginning an audit of its compliance with state sales and use tax laws.

The state has asked Amazon for the names and addresses of residents who have purchased items on the site since 2003 in order to collect taxes. Last year, North Carolina passed a law requiring out-of-state retailers to collect sales tax in the state if they have marketing affiliates there.
 
Marketing affiliates are people who earn a fee for providing links to online retailers on their own Web sites, The Wall Street Journal reported. While Amazon has cut its ties with North Carolina affiliates, state officials want to seek taxes for sales during the years those affiliates were operating, even before the law was enacted.
 
The state wants to find out what kind of items were purchased on Amazon under the belief that it is missing out on millions of dollars in uncollected sales taxes on some of those items.
 
“This is really an issue of fairness and equity for small businesses, the brick and mortar, corner store operations,” Kenneth R. Lay, the state’s secretary of revenue, told The New York Times. “These businesses are at a competitive disadvantage when they have to collect sales taxes that other businesses do not.”
 
Federal law prevents states from requiring out-of-state retailers to collect sales tax if the company does not have a physical presence in that state.
 
Amazon, in a complaint filed in Federal District Court in Seattle, states the audit violates the First Amendment and customers’ privacy rights.
 
Lay said the state is not interested in specifics. “It is important to know whether a book or steak was sold, but we don’t care about the title of the book or the type of steak,” he said, adding that the tax rates are different in each case. “We have too much data. The last thing we need is data we don’t need.”
 
Amazon said it has already provided "the order ID number; the city, county, and zip code to which the item was shipped; the total price for the transaction; the date of the transaction; and Amazon's standard product code for each item,” according to court papers. The company refuses to disclose more personal details.
 
An editorial in the Winston-Salem Journal May 10 stated, “What Amazon can afford in legal costs, Aunt Millie's Internet quilting business cannot. That is why small Internet retailers should simply agree to North Carolina's offer. If they agree to collect the taxes, they need not worry about being sued by the state.”
 
North Carolina is not alone. Other states are trying to capture sales tax on online purchases. Colorado this year passed a law that requires online retailers to collect sales tax or share the purchaser information so that the state can get consumers to pay. Amazon removed its marketing affiliates from the state in response, and has already done so in North Carolina. New York in 2008 also required online retailers to collect sales taxes from state customers. Amazon challenged the law in court, lost, and appealed. A decision is pending.
 
Related articles:

You may like these other stories...

IRS must take oath on Lerner emails: judgeMackenzie Weinger of Politico reported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the...
The Republican-controlled House of Representatives passed a bill on Friday morning that would permanently extend the bonus depreciation tax break for businesses.The measure, HR 4718, which was crafted by Representative Pat...
The Republican-led House of Representatives is expected to pass a bill this week that would permanently extend the bonus depreciation tax break. But don’t expect President Obama to sign it.The Obama administration said...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.