Amazon Files Lawsuit Blocking North Carolina's Request For Data

[engine]

Amazon Files Lawsuit Blocking North Carolina's Request For Data [uk.reuters.com]

Online retailer Amazon.com has filed a lawsuit in a federal court to block the North Carolina state government's demand it disclose all transaction details, including names and addresses, involving state residents, court documents show.
In the complaint, Amazon said that North Carolina Department of Revenue (DOR) is demanding that the retailer turn over the name and address of virtually every North Carolina resident who has purchased anything from Amazon since 2003.

Amazon also said in the court filing that DOR also demanded the company furnish records of what each customer purchased and how much they paid.

The company said the disclosure of such information will invade privacy of its customers.

[driller41]

Good grief, why Amazon, why not every online retailer or offline for that matter.

[purplecape]

They are the biggest. Start with them. If they win, then they have a clear precedent and can deal with the rest.

[bwnbwn]

Question just how long do you need to store a purchase off your site by law? I don't think there is a law for that. I know you are required to store cc reciepts for a couple years but as far as a purchase I am almost positive there isn't a law requiring storage.

I know if they sent me this I would tell them to visit my garden because I don't store but 6 months worth. The older ones are burned and added to my compost pile.

[driller41]

That sort of thing would stop people shopping at Amazon

[incrediBILL]

They are the biggest. Start with them. If they win, then they have a clear precedent and can deal with the rest.

They're going directly after the money.

If they win in court, it's a potential windfall in lost revenues.

NC also recently approved a tax on intangible items such as digital downloads so I'd expect to seem them take aim at iTunes as well.

Amazon has substantial sales of both tangible and intangible (digital) items, a 2 for 1 bonus.

If Amazon doesn't stop NC, they'll be rocking Apples world next.

[Zamboni]

I believe Apple collects tax for different states as applicable.

"...We will only charge tax in states where digital goods are taxable."

From Itunes U.S. terms page.

[Sgt_Kickaxe]

Go Amazon!

Actually, I want to know the NAMES of the "government workers" who gave the green light on attempting to aquire personal data. You don't fight without taking names, who made the original request ?

Even the all mighty "North Carolina Department of Revenue" has someone in charge who is accountable for what it does.

[frontpage]

If you check the party affiliation of the North Carolina Governor, Beverly Perdue, you would have an answer as to why this is taking place. The NC governor has the same thing in common as the governors from New York, Rhode Island, Hawaii, and Colorado who pulled the same stunt. Privacy be damned and taxes here we come.

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.

"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."

[HRoth]

They are going back 7 years, which is the amount of time you are supposed to keep tax records on hand for the IRS, so it makes sense they want back to 2003.

NC must be even more broke than NY.

[physics]

Glad they are fighting this!

[incrediBILL]

Most states require the resident purchaser to pay applicable taxes.

Since these people haven't paid their taxes on these purchases they are in violation of the law, so it's a legal thing, not a privacy thing, and Amazon is the most likely place to collect from the most that haven't paid their taxes.

So it's really not a privacy thing, it's a scofflaw thing.

Which probably puts NC's legal request for tax collection as the winner.

Don't yell at me, I don't like it either, I'm just telling how I think it'll go down.

[LifeinAsia]

I somewhat agree with incrediBILL's comments. However, in principle, I dislike the idea that the state government is pushing the burden of reporting onto the merchant. Subpoenaing records for individuals who are the subject of an audit? Yes, I can definitely agree with that. Blanket requests for ALL sales? No, I don't agree with that- that seems like the BoR is overstepping its authority.

Let's say that Amazon (and other retailers) are forced to hand over the records. After the huge expense of processing all that data and matching it up against tax returns and going after the "scofflaws" (not to mention the cost of this lawsuit) would the state even come out ahead?

[HRoth]

But do you think the point is actually to get that information or to encourage Amazon to start collecting sales tax for NC?

[incrediBILL]

I think the point is to get the cash.

Can you imagine billing people for 7 years of past unpaid taxes on Amazon goods and services?

Many millions of dollars just waiting to be collected.

Not only that, it probably comes with penalties for not being paid in a timely manner and interest but I'd assume the first volley of collection letters would waive the penalties if they paid in a timely manner as a "goodwill" gesture to the public.

[tangor]

Biggest problem I have with NC's DOR request of Amazon is making the merchant a "revenue" officer of the State. That's not going to happen. The customers are the ones breaking the laws of their State (use tax) by not declaring they made these purchases. The last thing we need is compulsory revelation of Names and Addresses of purchasers of product (including what they bought and value) by MERCHANTS.

Best hope this fails, else your ecommerce site is next.

[incrediBILL]

Businesses are already responsible for reporting employee wages and taxes so this isn't much of stretch really to include out of state sales.

[tangor]

incrediBill... I love you, and you are brilliant in many things, but in this regard I can only believe it is a sector of business law you've not visited before. This is really scary stuff. More info here: [theregister.co.uk...]

But the DOR wants more - it wants to know exactly what books and video individual North Carolinians bought. And Amazon isn't buying it: "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."

Sales records are one thing, says Amazon. "But the DOR has no business seeking to uncover the identity of Amazon's customers who purchased expressive content, which makes up the majority of the nearly 50 million products sold to North Carolina residents during the audit period, let alone associating customers' names and addresses with the specific books, music, and video content that they have purchased during the past seven years."

[incrediBILL]

Amazon doesn't need to disclose the actual purchases, only the name, address, and total purchase amount that is taxable.

If they disclose the actual content of those purchases, then I'll agree it's a privacy issue, and I can't imagine any court will support that.

Knowing that JOHN DOE bought $123.00 worth of goods on a specific date really isn't a privacy concern,

Disclosing that it was all contraceptive devices, that's another story ;)

[JohnRoy]

After the huge expense of processing all that data and matching it up against tax returns and going after the "scofflaws" (not to mention the cost of this lawsuit) would the state even come out ahead?

Most probably Yes - they might end up collecting tax for the past 7 years plus penalties plus all other major online stores that will be targeted once they win with amazon, plus all the taxes for all future purchases.

If national online sales get hurt, will tax invaders now buy overseas? ;)

[tangor]

From that same article above:

The North Carolina Department of Revenue (DOR) is investigating Amazon for compliance with sales tax law. All well and good, says Amazon in its filing in the US District Court of the Western District of Washington, but: "All [the DOR] 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," the filing reads.

But the DOR wants more - it wants to know exactly what books and video individual North Carolinians bought. And Amazon isn't buying it: "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."

Sales records are one thing, says Amazon. "But the DOR has no business seeking to uncover the identity of Amazon's customers who purchased expressive content, which makes up the majority of the nearly 50 million products sold to North Carolina residents during the audit period, let alone associating customers' names and addresses with the specific books, music, and video content that they have purchased during the past seven years."

(emphasis mine)
We're on the same page, I believe. I have produced "total sales" for venues but I have never revealed BUYERS. And I never will. I'd stop doing business in that locale demanding same before gving up that info.

Not that I sell dodgy stuff, but nobody needs to know what kinds of comic books or adventure romance literature somebody buys. Or kneesocks, canteens, or live oak seedlings.

[HRoth]

They don't want to know that, tangor. They just want to collect the tax, and in a lot of states, whether you have to pay sales tax or not depends on what you bought (clothes, food, etc.).

They do indeed have a right to make a merchant collect sales tax if the merchant is selling in their state. Or they can bar the merchant from selling in the state. If Amazon does not want to collect sales tax, all they have to do is quit selling to people in NC. Or NY.

We constantly have this discussion and people get all enraged and start yelling about how we won't do this won't do that. Well, you can do whatever you want, but then there are consequences. The states are going to figure out a way to handle sales tax collection on the Internet one way or the other. It's just a matter of time. They HAVE to do it. And really, I do not see how you can blame them for that.

That said, I personally quit buying on Amazon when they started charging NY state sales tax. I buy used from Abebooks now. But I know the glory days of not paying sales tax online are soon to be over.

[bwnbwn]

Question. I have a checkout by amazon that allows a customer to use their amazon account to chekout through my website. We are not an Amazon store just added the ability to use Amazon to process orders.

Now the question since I have a number of orders coming from NC. will this data be included into what Amazon is being asked to fork over?

[jwolthuis]

I think North Carolina's request is fine, as long as it applies to North Carolina businesses as well. Make every NC corner gas station record the name, address, tax collected, and type of candy bar purchased by every kid.

[LifeinAsia]

They do indeed have a right to make a merchant collect sales tax if the merchant is selling in their state.

Completely disagree. If a merchant does not have a physical presence in the state, the merchant is not required to collect sales tax.

If this is going to apply to Internet companies, it should equally apply to all B&M stores as well. Every gift kiosk in Las Vegas, New York, San Francisco, Orlando, and every other tourist area (not to mention EVERY area that has ever had a visitor from North Carolina) should have to supply the same data to the NC DoR. Which obviously ain't gonna happen.

I can see the DoR trying to go after Visa/MC, AMEX, and Discover next to subpoena their records for all residents of NC.

[HRoth]

"Completely disagree. If a merchant does not have a physical presence in the state, the merchant is not required to collect sales tax."

But that's just what they're aiming to change. And they will. As long as it's just a few states here and there, then people will be willing to buy from some other state to avoid paying sales tax. But once it reaches critical mass, people are just going to pay it instead of buying from abroad, even from close-by folks like Canada.

I don't see the parallel with kiosks. They have to collect sales tax from every customer they have. Are you saying ecommerce is like a kiosk?

[LifeinAsia]

I'm saying ecommerce is like commerce.

If NC wants information from Amazon because they ship to customers in NC, then NC should also demand:
- information from ANY company that ships to NC (catalog order, etc)
- information from ANY company that sells to a NC resident who then brings that item back to NC

After all, in all 3 cases, the NC resident is liable for NC use tax on the items (assuming the items are taxable). So unless NC demands the same information from EVERY retailer in the U.S., demanding it of just Amazon is discriminatory.

[HRoth]

But a kiosk doesn't know where their customers are from, even if they pay with a card. Amazon knows where every single one of their customers are from.

[tangor]

I have no problem reporting Customer X bought $X for year ending X. I have a problem being required to say WHAT Customer X bought. That is an invasion of privacy.

Kiosks are located in a particular area and are, by local laws, required to collect sales tax, not customer information. B&M stores are required to collect sales tax, not customer information. It is the customer information (what they bought) where I draw the line.

[lorax]

I can't wait for this concept to reach across national boundaries. Said with sarcasm and fear.