Flash! Amazon fighting NC’s request for customer info

Flash! Amazon fighting NC’s request for customer info

First, I’m happy to say this has nothing to do with the agency model.  :)

Second, I’m unhappy to say that it is part of a growing movement to redefine Amazon as having a physical presence in a state if it has “Associates” there.

Here’s that basic issue:

A state can compel an internet retailer to collect sales tax at the time of purchase if said retailer has a “physical presence” in the state.  That means a building, or, more significantly to this instance, a “sales force”. 

For mor information, see this previous post.

We’ve seen in a few states the attempt to compel Amazon to collect sales taxes at the time of sale because they have “Associates” in those states.  Associates are part of a free program that allows you to post “referrer links” on a website, and get money if people buy from those links.  I use them in this blog, as I’ve stated before, even though I make very little money from it, typically.  Some bloggers make a lot, by the way.  I’m just not tending to recommend hardware and such, and we don’t get any money for Kindle books.

If the state makes that declaration, and it holds up in court, Amazon can be compelled to collect the tax (if you would have had to pay tax in your state in a brick-and-mortar store…for example, I live in California, and they don’t tax e-books delivered electronically, so I don’t have to worry about it).

Collecting tax is cumbersome and expensive, and I’m sure Amazon would rather not do it if they can avoid it.

Note that it doesn’t mean the state wouldn’t get the sales tax.  If your internet retailer doesn’t collect it from you, you are typically supposed to report it on your annual tax form (I reported this year).  The state hypothetically gets it in either case, but it’s who has to have the expense of collecting it.  Lots of people don’t report it on their state taxes as well, and although they could prosecute you for it, that’s also expensive. 

Well, according to this

AP article

the North Carolina situation has taken a strange twist.

When a state passes a law like that, Amazon can avoid collecting the sales tax by cutting off the Associate program in that state…they did that in Colorado, for example.  Yes, that means Amazon gives up that “word of mouse”, as I call it, and those poor Associates lose the income.

In 2009, the state legislature of NC passed a law that would compel Amazon to collect the tax based on those Affiliates.

Amazon ducked, by canceling the program.

Case closed, right?


NC wants to collect the sales taxes for Affiliate sales made before the law went into effect…back to 2003.

In order to do that, they are asking Amazon to give them the names and addresses and amounts of sales for all those transactions. 

Yes: the state of North Carolina wants Amazon to give them your name and address so they can come after you.

Amazon is fighting this.

They say it would violate privacy policies.

Amazon filed suit with the U.S. District court to have the request ruled as unconstitutional.

Now, I’m not going to try to argue that this is altruistic and noble on Amazon’s part…customers wouldn’t like it if they gave up that info.  But honestly, I do think their privacy being maintained is what most customers would prefer.

I suppose if it was decided that not paying those sales/use taxes on your annual taxes was a crime (and it may very well be), and this was an investigation of a crime, and they had a warrant…Amazon would be compelled to obey.

I don’t know enough about the relevant law in North Carolina, though.  Is there a statute of limitations on not paying taxes?  Is the “remedy too broad”…can they get that information on people if they have no reason to suspect that they didn’t pay the taxes?

Brave new world, indeed…

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

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2 Responses to “Flash! Amazon fighting NC’s request for customer info”

  1. Dave Freer Says:

    I don’t know much about North Carolina either, but if this is not a good example of killing the golden goose, then I don’t know what is. If they have any suspects worth more than a pittance 1)they’re as obvious as can be with a little research and then normal court proceedings can take place (ie their staff are either too lazy, too ignorant or both, and want Amazon to make easy), 2)they might recover some money from them, but as Amazon has already proved by their robust (and sensible IMO) response in Colorado, that none of that future income will be earned by people in their state, who in turn won’t be able to spend it there, costing jobs and of course all the sales tax those purchases would have raised when the money was spent (to say nothing of the money they would have got from the people who did pay the sales tax – whose business they have now destroyed).

    Whoever the beaurocrat was who thought of this little wheeze is, they’re obviously not much good at thinking logically about consequences. Perhaps someone ought to write to the local governor and point out just how ‘clever’ this is? (but it probably his idea…)

  2. bizhobby Says:

    I think this is about power and showing who’s boss. However, as Dave pointed out – this is going to have other negative effects. The serious associates making good money would immediately relocate to another state where this is no longer a problem. They would no longer bring Amazon’s profit into NC, won’t pay any NC state tax on it (I think it is roughly 6% of their income). They will also sell their propertiy in NC, and stop feeding the local economy.

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