Lists that identify the titles of books, music, and movies purchased by Amazon.com customers are protected by Free Speech rights guaranteed by the US Constitution, a federal judge has ruled. The landmark ruling by US District Judge Marsha J. Pechman of Seattle, was a sharp rebuke of North Carolina's DOR, or Department of …
I'm glad they won, but I can't help but be bothered at the obvious fact that Amazon is only protecting its interests of helping its customers evade sales taxes. Not that I'm a fan of adding more taxes to anyone's lives, but I do appreciate it when businesses have to play fair with each other - And surely Amazon gains a significant advantage over other retailers by offering goods "tax-free" (since the customer will never report online purchases to the IRS).
This puts pressure on the states to keep their sales taxes competitive, so that their resident businesses aren't at an insurmountable disadvantage from businesses in a low sales tax environment.
out of state
Amazon's operation is more akin to an out-of-state mail order business, which would not be liable for paying or accounting for state sales tax in a state in which they were not located, even under NC's grabitall law. I expect they will rethink their voucher scheme or whatever it is that NC claim gives them a local presence. Many an offer in the USA carries a disclaimer that it is not valid in certain states because of their local sales tax regs.
... isn't the best way to go about everything.
or maybe.... they don't want to do all the work
States with sales tax often have a state tax, county tax, and city tax. I would imagine that Amazon executives are not interested in increasing the compliance overhead required to keep track of all sales tax rates in the U.S. and monitoring for changes.
Besides, if I visit NC and show my out of state drives license, they don't waive the sales tax for me... so I see no problem with some residents neglecting to pay taxes on the $200 (arbitrary number) worth of purchases they made last year and didn't report to their tax collector.
So much for North Carolina
I hope anyone thinking of moving their family and/or business to North Carolina will think twice based on this. Kudos to Amazon for standing up to them!
I wonder if it can serve as precedent to prevent Google turning our searches over?
Just costs then?
Can't the state just ask for the records with the product name / type removed?
...they'd need to know the product type in order to be able to tell whether or not it is subject to sales tax.
Re: Just costs then
I expect that is just too smart for the politicians to think of. Of course, for goods sold out of regular shops, the privacy concerns appear to be different. Persumably the shop pays the tax and therefore the actual link between customer and product is broken.
Or more pertinently...
Require a list of each customer with each item only showing quantity and price since that is all that would be needed to calculate sales tax.
I am always a bit torn by stories such as this as I want the protection for online purchases but I also see the 'big corps' using every loophole possible which the smaller retails can't get into. Like Google with their Double Dutch Irish Sandwich or whatever it was. Whilst it is a law in some countries that companies must deliver maximum value to shareholders, to believe that justifies the extent of tax-avoidance that some go to is just wrong. Perhaps if the various individual states (and commonwealths) could get sufficiently together they could convince the government to flatten the tax structure and build one with no loopholes or allowances. It always seemed ludicrous to me that in the UK they took tax from low income people and then processed it through a number of government departments before giving some back to help those struggling. How about taking less in the first place? The only people who would be hurt by a flat-rate no loophole tax system would be rich people including tax lawyers.
ah yes, OK then...move along, nothing to see here
Yes, _if_ they have a right to know what goods residents have had shipped in, then the invoice value will obviously be held by Amazon as a separate field in their records. All they had to do was ask for name, address, shipping date and invoice value. Also perhaps the type of goods; book, DVD, electrical goods, etc.
But they didn't; they asked for the entire invoice, including details of which goods had been purchased. For some reason, the people of the US are very sensitive about their government knowing which books they have read (perhaps somebody can explain the story behind this?).
It seems that North Carolina's DOR is not staffed by people who know how to think things through.
trusting your government? Or your corporations?
> For some reason, the people of the US are very sensitive about their government
> knowing which books they have read (perhaps somebody can explain the story behind this?).
Good question. There are plenty of anecdotes about the difference between Europeans and Americans, that you trust your governments and not corporations, whereas we tend to trust corporations more and government less.
I'm not sure why this is. Maybe it's a left over "if I move far enough away I can escape all these third parties meddling in my affairs, like the tax man collecting taxes" mentality. Perhaps everyone in Europe that had this gene migrated to America 200 years ago? (And where do these people go today when they want to get away from it all? I guess they build compounds in the boonies, and stockpile weapons for the coming invasion by ATF, the commies, or ETs.)
One of my "favorite" meddlings is my health insurance provider continuously checking whether we have other coverage through my wife's employer. For the twenty-seventh time this year: no. And if we do get any, we'll tell you. Or more appropriately, the bills will go to the other company first. So stop asking and just pay the bills, which is, after all, what I'm paying you for.
Good for Amazon
IIRC, didn't Amazon terminate affiliate agreements for all affiliates located in North Carolina?
Not that this is a big deal. If you're doing significant enough business as an affiliate, just register as a corporation in Delaware instead. They like your business taxes, and it still lets you make your sales to North Carolina residents without them having to incur taxes.
This ruling is a victory for privacy and free speech
It has nothing to do with the Internet.
...how many days until this gets overturned?
I am dreaming aren't I? That was a sensible decision made in an American court, made in favour of protecting consumers?
*roll over, back to sleep, wait for the alarm, soon be time for work...zzzz*
Re: Sensible ruling
@Trevor_Pott: "I wonder if it can serve as precedent to prevent Google turning our searches over?"
No. Compliance with search warrants, and court orders is a different matter. Google was handing over search data to comply with search warrants. If they didn't, they would be fined, or their officers would be in jail now. Compliance with a request state taxation official, is rather different. Don't they tech Civics in school anymore?
@Penguin herder: "I hope anyone thinking of moving their family and/or business to North Carolina will think twice based on this. Kudos to Amazon for standing up to them!"
I think people will think twice, but not for the reason you think. If the state is unable to tax purchases made from out of state entities, then the businesses actually in the state need to pay more. Rather than kudos, it sucks to be North Carolina. So much for roads, schools, bridges, police, or sewers. So definitely don't move there. Not only will you have to make the difference for the freeloaders, their infrastructure sucks too.
The state tax system in the US is broken. All 50 states should agree to implement the same state tax system. A state tax treaty. The current system is a huge barrier to running a small-medium business in the US. Especially as more commerce moves online. Initially, it will be a lot of kudos, as businesses avoid tax (tax evasion is illegal, tax avoidance is not), but someone has to pay for all of the crap that you use every day. The current system was created, when small businesses would do business with a single state, or open offices in each additional state. Now that you can sell complete virtual products or services to anyone anywhere, taxes get messy.
Did I see somewhere that Amazon have just been hit for a 200-odd million tax bill anyway?
Surely price and applicable tax rate is all that's needed to be known, content, I would agree would be a privacy issue.
Must be like utilities really, used volume is all that's needed, not what the volume is used for, it's none of the govs. business how many times a day I boil water, just so long as the payment for the utility is made.
Calculating the actual tax due is complicated as you need to know not only the State but also the City, and County (or Parish if you live in Louisiana) where the item was delivered - sometimes there's also a separate tax district that may apply too... all of these affect the amount of tax ...
Except that if you actually live in the area then you're charged sales tax based NOT on where you live, but based on where you BUY the item ...
And don't forget that if you buy the goods during a sales tax "holiday" then some or all of the taxes will be different.
But the root of the matter is that the State of North Carolina is trying to enforce its laws in another State ... almost as if the State of Caroline thinks IT'S the federal government. Federal laws apply across State lines but State laws do not.
No, the State of North Carolina is not trying to enforce its laws in another State,
it is trying to enforce them in its own State. Citizens of NC owe sales tax on items they buy. The catalogue decision protects the seller from being forced to collect the tax, not the citizen from having to pay the tax. Hence the Department of Revenue needs to have the list of items purchased as well as the prices paid in order to enforce the law on its own citizens. I expect the ruling will be overturned on appeal, partially because most DoR agencies are prohibited from filing criminal charges in order to ensure they collect the maximum revenue. Odd but true fact: If Al Capone had put down: Income $xx million, protection rackets on his 1040, he would never have gone to jail for tax evasion, and the 1040 couldn't be used to prosecute him in a criminal case.
The State of North Carolina is trying to make Amazon, a company located in another state, collect the Sales Tax that North Carolina thinks it's owed. If it gets away with this - then Amazon, located in Oregon will have its accounts audited by sales tax officials from North Carolina ... and eventually by every State in the USA that it sells anything into - the implication is that any company doing business in the USA will need to be audited by every State because the companies will be collecting states tax for all of the States.
That, in itself is unworkable - but we've just established a principal that a State can regulate what happens in another State when it's citizens are involved.... so, if you live in a dry county in Texas, where the purchase of alcohol is illegal - then maybe the State can may it illegal for you to purchase alcohol anywhere in the USA ... simply based on where you live ... and perhaps, if you are a law abiding Texan, licensed to carry a concealed weapon in Texas, then you should be allowed to carry anywhere ...
There are very good constitutional reasons when State Laws apply to States and only States while Federal Laws apply across State lines. And State Sales Tax ain't a Federal Law.
Interception Modernisation Programme
When IMP is implemented here, the UK gov won't need to request these records from Amazon, they'll already have the data captured in their own database.
Steady on there Tom, that's crazy talk.
Next thing you'll be suggesting that the US adopts a national drivers license so that police forces in each state can recognise it.
...or that they create a State police force and stop wasting billions on duplicate administration having 15 police forces for every town/village/city in the state.
Or fund the fire department at the state level rather than from fines levied on the interstate by State Police Troopers.
Things like this would turn the US into a modern country but would cut pork-barrel and we can't have that.
Mines the one with a few good ideas in the pocket...
...reading about how proper countries enforce freedom of speech and the right to privacy.
I am waiting for Airstrip 1 to introduce retinal scans to access teh interwebs soon enough.
We [the company I work for] received a phone call from a North Carolina sales tax auditor about 15 years or so ago. The state was auditing one of our clients and discovered they were not paying the "use taxes" on purchases from us. We are located in Tennessee and have never had any offices, representatives or employees from North Carolina. They claimed that we had nexus simply because we shipped something to an address in their state and demanded that we disclose all our clients, a complete list of all purchases ever made by same and immediately begin withholding and reporting sales taxes for them.
Our response? We hung up on them. They called and repeated their demands several times and, yes, we hung up each and every time -- as our attorney advised us to do. According to him [our attorney], if we argued with them or discussed the issue in any way, we would have "entered negotiations" and become liable for the taxes forever. I thought he was nuts, but it worked and we continue to supply to many clients within North Carolina to this day.
Many states, Tennessee and North Carolina included, are trying to enforce tax collection from other states via the Streamlined Sales Tax initiative. But, all posturing aside, this will go nowhere without a Federal law permitting it (and probably an amendment to the Constitution). Since the US is now run by corporations (and they most certainly do not want this to happen), it doesn't seem likely anytime soon.