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NC wants to tax Amazon buyers for 8 years of purchases

Old 04-21-10, 09:10 AM
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NC wants to tax Amazon buyers for 8 years of purchases

It's Amazon Versus the Taxman in North Carolina

Amazon is fighting back against what it calls an invasive inquiry from the state of North Carolina. The retail giant has filed a lawsuit challenging North Carolina's demand that it hand over the names and addresses of every state resident who purchased items on the site since 2003 in order to collect income taxes.

In a 14-page complaint [PDF] filed in U.S. District Court for the Western District of Washington, Amazon claims the state's request "will invade the privacy and violate the First Amendment rights of Amazon and its customers on a massive scale." Beth Stevenson, director of public affairs at the North Carolina Department of Revenue (DOR), declined to comment.

Amazon's main argument is that it has already complied with the DOR by providing "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."

Providing more personal details about the more than 50 million orders between August 1, 2003 and February 28, 2010 could curb individuals from purchasing potentially controversial materials out of fear of disclosing their choices to the government, Amazon says. The suit uses Lolita, Fahrenheit 9/11, Brokeback Mountain, and the music of Eminem as a few examples of items that are apparently considered controversial.

New York passed a similar law last year, dubbed the "Amazon Tax," when the governor decided to tax all online purchases. Earlier this year Colorado enacted a similar law, which resulted in Amazon removing its marketing affiliates from the state. 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 has already removed itself from North Carolina and currently doesn't collect sales tax there.

According to Amazon's complaint, North Carolina is also violating the Video Privacy Protection Act of 1988, a law that makes it illegal to disclose personal information about movies rented for entertainment purposes
. The Video Privacy Protection Act archaically covers "prerecorded video cassette tapes" but has language protecting "similar audio visual material."

"Despite assurances from tax collectors that the era of Big Brother isn't here, they seem to be doing a lot to rewrite the book for modern times," Pete Sepp, the executive vice president for the National Taxpayers Union, told CNET. "Unless Amazon succeeds, extraordinary demands like these could become the norm."

http://news.yahoo.com/s/pcworld/2010...orthcarolina_1
Amazon e-commerce tax fight heats up

North Carolina: Hey Amazon, we want your customer records for everyone that lives in our state. We want names, addresses, and a list of everything they've bought over the last eight years.

Amazon.com: Why?

North Carolina: We're going to send them tax bills for that stuff.

Amazon.com: Hell, no, North Carolina.

And so it has gone between the state of North Carolina and Amazon.com over the issue of sales taxes for goods sold to residents of the state since 2003. North Carolina says it wants back taxes for purchases that were sold tax-free via the online merchant. Amazon says it's not going to give up that information, as it violates the privacy and First Amendment rights of its customers.

Now it's up to a federal judge in Seattle to figure out whether the demand is even legal. The company is hoping North Carolina drops the request altogether, seeing as how Amazon has no "nexus" — a physical presence in the form of an office building or warehouse — in the state. This exempts Amazon, from a federal standpoint, from collecting sales tax there.

It doesn't, however, exempt buyers from having to pay a use tax on goods they purchase from out of state. Most states have use-tax laws. Technically, we're all supposed to declare such purchases on our income tax returns and pay the appropriate tax on them, but in reality, few people ever do this. North Carolina, hurting for revenue like all the other states, probably figures it has hit on a simple solution to such behavior — that is, forcing Amazon to give up its customer data so it can simply bill residents directly.

Few are happy with this move, as it clearly smacks of Big Brother tactics. Never mind the extra tax bill: Who among us wants the government armed with a list of our purchases from the last decade?

The case sits with a judge for now, but I'm not altogether hopeful. The courts have generally been friendly toward states trying to weasel their way into e-commerce taxation, as evidenced by New York's enacting and upholding of a law that allows it to tax residents for all online purchases by considering "affiliate sales program" members — website owners who host links out to merchant sites — to be a nexus. Other states have efforts similar to North Carolina's in the works. All it takes is one domino to fall and the rest of the states are likely to go along with it.

Be afraid.

— Christopher Null is a technology writer for Yahoo! News. \

http://news.yahoo.com/s/ytech_wguy/2...ch_wguy_tc1712
As a NC citizen, I hope Amazon fights this all the way. God I would hate to see my tax bill for 8 years of Amazon. After purchasing Prime, nearly everything I purchase is from there.
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Old 04-21-10, 09:19 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

As a consumer, it sucks but as a state, I could see why they want to do this. Especially with revenue down and budgets in the red.

Couldn't they just demand the consumer name with the total price and not the item itself and skirt some privacy issues? I'm not sure how they can compel Amazon to release it though if they don't have any business locations in NC.
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Old 04-21-10, 09:27 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

"To collect income taxes"? Do they mean sales tax?

Anyway, to play devil's advocate, you can protect free speech by simply having amazon give information like:

3/4/2007 - Media - $27.69

Then no one has any idea what it is. NC doesn't care about the content, they just want the tax.
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Old 04-21-10, 09:31 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

So it's not a retroactive tax, but a tax that already existed that few people actually pay. Interesting.

I remember being hounded for Use Tax in Washington for my business. Since it was a business and I had very few out of state purchases, it wasn't hard for me to track and report (I always had receipts). But tracking every personal purchase from every online retailer would be difficult. I don't recall who I might have purchased from that didn't charge tax since checkout is a quick process for me. I'm pretty sure I always had to pay tax at Amazon though.

This will be an interesting one to watch.
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Old 04-21-10, 09:36 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

I suspect this is a bigger issue in states that don't have income taxes
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Old 04-21-10, 10:26 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Revenue secretary Kenneth Lay said Amazon's complaint is misleading. North Carolina is seeking customer names and how much they spent, he said - not specific titles or products. Once the state gets the information, it will go after active customers with big tax bills.

"If you owed $5,000, you'd probably get an invoice," Lay said. "If you owed $1.98, you probably wouldn't. We're not asking for anything that's not due the state."
In December, the Department of Revenue asked Amazon for information about all sales to customers with a shipping address in this state who made purchases between Aug. 1, 2003, and Feb. 28, 2010. Amazon refused to provide personal information such as customers' names, addresses, phone numbers and e-mail addresses.

Then in March, two agents with the department, Romey McCoy and Jerri Noland, visited Amazon's Seattle headquarters and tried to get more information from employees, the company wrote. The state gave Amazon an April 19 deadline to turn over the information, which prompted the company's lawsuit.

Read more: http://www.newsobserver.com/2010/04/...#ixzz0lkExGNvA
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Old 04-21-10, 10:37 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Generally, any type of business entity (individual, partnership, corporation, etc.) that makes purchases of tangible personal property is subject to use tax unless it previously paid at least a 7 percent sales tax on the purchase to the vendor. Use tax can be thought of as a mirror of the sales tax. Both our sales tax and use tax rates are 7 percent.
We've had use tax in Indiana for several years but it is up to the tax filer to compile the tax. I have no idea how much it is enforced.
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Old 04-21-10, 11:10 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

I have never paid use tax. I honestly don't know an individual who does, and most people probably don't even know you're supposed to fill it in on your tax returns. It's just "no sales tax on Amazon = good deal."
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Old 04-21-10, 11:20 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by spainlinx0 View Post
It's just "no sales tax on Amazon = good deal."
Hell yeah! As we have stated in other threads, we pay enough in taxes at all levels in the US

I really hope Amazon wins this one because it opens up a huge door for every state to start doing this. The states with no income/property tax that purely run on sales tax will have very high motivation to jump on the bandwagon.
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Old 04-21-10, 11:20 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by Venusian View Post
As a consumer, it sucks but as a state, I could see why they want to do this. Especially with revenue down and budgets in the red.
Today North Carolina, Tomorrow New Jersey, The next day, New York
etc. etc. This will kill me because I buy a lot from Amazon.
When it happens in NJ, and it will if it works in NC, I'll just
have to stop or cut down buying from there.
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Old 04-21-10, 11:25 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

So since NC is so broke they are trying to tax my Amazon purchases, do I have to stop complaining about not receiving a raise last year and this year?
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Old 04-21-10, 11:44 AM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

The problem I see is that a use tax is for items used in the state and not for items purchased as a gift for somebody in a different state. That is, say I buy a CD on Amazon that I will be sending to my sister in a different state, or something that I will be using while on vacation in a different state (only). The use tax would not apply.
Originally Posted by wishbone
I have no idea how much it is enforced.
I remember seeing an article a few years ago about the use tax in Illinois, maybe 10,000 people actually fill out the form each year and most of them are politicians or other high-profile public officials, not to mention the department of revenue employees who can be fired for tax offenses.

By the way, for cigarettes, there is a 1949 law called the Jenkins Act which requires companies that sell cigarettes to other states to provide a state the names / addresses / amount purchased if requested. I saw an article on this a few years ago where the state had sent out bills to maybe 20,000 people, I remember that the bills averaged about $200 per person.

And personally, I think that internet purchases should be taxed but that this tax needs to be applied by the company and not self reported. But a company should have to deal with 50 states only, and not counties, towns, etc.
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Old 04-21-10, 12:42 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

HA! Up your butts, I say. I've been paying sales tax on Amazon from the begining, and it is still the best place to shop.

So if it is a use tax, shouldn't you claim it was shipped to you, but given as a gift to someone out of state, and its use is not in NC?
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Old 04-21-10, 12:47 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by kvrdave View Post
I've been paying sales tax on Amazon from the beginning, and it is still the best place to shop.
Absolutely.
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Old 04-21-10, 01:22 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by kvrdave View Post
So if it is a use tax, shouldn't you claim it was shipped to you, but given as a gift to someone out of state, and its use is not in NC?
Not that anyone cares about such a thing, but wouldn't that be tax fraud?
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Old 04-21-10, 01:44 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Surely some of the things were given as gifts.
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Old 04-21-10, 01:50 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by Suprmallet View Post
Not that anyone cares about such a thing, but wouldn't that be tax fraud?
Yes, unless they really were gifts, but I see North Carolina just sending out a tax bill and not allowing exclusions for "gifts".

Back to cigarettes - if Congrass had to pass a law in '49 (the Jenkins Act) to allow states to get records from out of state companies for cigarette purchases, wouldn't the same thing be needed for Amazon? That is, North Carolina can request the information from Amazon but has no way to actually force Amazon to hand over the information since Amazon has no physical presence in North Carolina.

The only way I can see Amazon being forced to hand over the information is if it came from the federal government, and that would mean that Congress would have to do something. Good luck.
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Old 04-21-10, 02:19 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by kvrdave View Post
So if it is a use tax, shouldn't you claim it was shipped to you, but given as a gift to someone out of state, and its use is not in NC?
The "use" of it was to you to give as a gift. Not who actually uses it.

You'd have to pay use tax on something that you left in an unopened box.
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Old 04-21-10, 02:52 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by X View Post
The "use" of it was to you to give as a gift. Not who actually uses it.

You'd have to pay use tax on something that you left in an unopened box.
I am sure that is correct. Sneaky.
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Old 04-21-10, 02:59 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

They will probably add fines and interest on to the tax bill, too.
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Old 04-21-10, 03:33 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by X View Post
The "use" of it was to you to give as a gift. Not who actually uses it.

You'd have to pay use tax on something that you left in an unopened box.
Depends on the state. From Illinois' Department of Revenue website:
When do I owe Illinois Use Tax?
You owe Illinois Use Tax and must complete Form ST-44 if the
person or business from which you bought general merchandise
or food, drugs, and medical appliances did not collect
Illinois Sales Tax (e.g., purchases from catalogs, TV advertisements,
magazines, the Internet); and
• the items purchased are taxable in Illinois;
you will use or consume these items in Illinois; and
• you have not yet paid
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Old 04-21-10, 08:27 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Thank God for Amazon for standing up for privacy issues.
Or maybe they're fighting this because they realize that if people are forced to pay taxes on their Amazon purchases, Amazon's sales will go down.
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Old 04-21-10, 09:23 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by Heat View Post
Depends on the state. From Illinois' Department of Revenue website:
Also from their website...

"Use" means the exercise in Illinois by any person of any right or power over tangible personal property incident to the ownership of that property.

http://www.revenue.state.il.us/Legal...3/sg030175.PDF
http://www.revenue.state.il.us/Legal...60/160-105.pdf
Under the Illinois Use Tax Act, persons who purchase tangible personal property (such as an advertising publication/booklet) and give it away make a taxable use of the donated property. If the person’s use of that property occurs in Illinois, the person incurs Use Tax liability (or potentially Service Use Tax liability for custom printed materials).

http://www.revenue.state.il.us/Legal...9/ST090077.pdf
It didn't give a time limit on it.
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Old 04-21-10, 09:45 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Hmm... didn't realize that. Good thing I don't buy anything on the internet. Amazon - that's a river in Egypt, right? Or is that... denial?
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Old 04-21-10, 11:55 PM
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Re: NC wants to tax Amazon buyers for 8 years of purchases

Originally Posted by Cheato View Post
Thank God for Amazon for standing up for privacy issues.
Or maybe they're fighting this because they realize that if people are forced to pay taxes on their Amazon purchases, Amazon's sales will go down.
As a WA resident who pays the sales tax, any dip is sales would be temporary. If Amazon gets hit, they will all get hit, and even with the sales tax, I still buy a lot at Amazon.
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