NC Department of Revenue Wants to Know Everything you Bought from Amazon

NC Department of Revenue Wants to Know Everything you Bought from Amazon

April, 20, 2010, by David

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We haven’t posted about NC’s revenue woes but now its getting all up in our business.  North Carolina Department of revenue is asking for your full purchase records on Amazon all the way back to 2003.  Here in NC we are required to pay a ‘use tax’ on any online purchases when we fill out our state tax return.  According to CNET NC is getting serious about making sure we have paid up:

The lawsuit says the demand violates the privacy and First Amendment rights of Amazon’s customers. North Carolina’s Department of Revenue had ordered the online retailer to provide full details on nearly 50 million purchases made by state residents between 2003 and 2010.

Amazon is asking a federal judge in Seattle to rule that the demand is illegal, and left open the possibility of requesting a preliminary injunction against North Carolina’s tax collectors.

Amazon has already given up an anonymized version of the information:

Amazon did provide the state tax collectors with anonymized information about which items were shipped to which zip codes. But North Carolina threatened to sue if the retailer did not also divulge the names and addresses linked to each order—in other words, personally identifiable information that could be used to collect additional use taxes that might be owed by state residents.

As Amazon actively fights this request, we can only hope that our purchases remain private, and that we submitted our state taxes correctly. The gross violation of our privacy rights is a step in the wrong direction for North Carolina citizens.

In the fall Amazon already revoked the affiliate accounts for thousands of NC web businesses after changes in tax law. This meant that those businesses could not collect commission for sending customers and traffic to Amazon.








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  • j0hn
    04/20 12:54 PM

    What a nightmare

  • rl
    04/20 12:58 PM

    nc is SO FUCKIN STUPID WHAT A BUNCH OF GREEDY BITCHES!! I HOPE AMAZON WINS THIS!

  • Betsy
    04/20 01:03 PM

    That’s outrageous.  These records are obviously protected by the Fourth Amendment which guarantees our right not to be subjected to unreasonable search and seizure. 
    .

    The state government can’t just demand to see what everyone has purchased.  It has to show some cause for wanting to know, such as a reasonable suspicion that a particular individual has broken the law.  And it certainly isn’t entitled to get this information ‘en masse’ for an entire state population. 
    .

    If Amazon responds, it could be subject to a lawsuit by any one of its customers.

  • Kevin
    04/20 01:52 PM

    How business friendly.  I’m sure on-line retailers are flocking to NC now.

  • John
    04/20 01:59 PM

    Can we get a list of politician’s names that were involved in making this decision? I need a list of who not to vote for.

  • Jeff
    04/20 02:35 PM

    maybe the DOR should spend a little more time working on getting me back my refund that i filed for 3 months ago, and a little less trying to collect $5 for my GPS i bought on amazon…

  • Lisa Jeffries
    04/20 02:44 PM

    John & Jeff - I couldn’t agree more. Time to write some letters… would love to know who specifically to address them to!

  • Micah
    04/20 03:12 PM

    Legally, we do owe sales tax on these items.  It is just that the tax code hasn’t quite kept up with the way we shop in this new age of technology.  Make no mistake, they WILL change it so that taxes can be more expeditiously collected across State lines.  If you read the (long) lawsuit, you will see that Amazon already provides a lot of data for each transaction to NC: date, total price, product description, city, county and zip code.  I’m sure the NCDOR is looking at this information and realizing that a LOT of tax money is being lost.  Also remember that some brick & mortar stores think it is an unfair playing field since Amazon has a very unfair advantage.  I don’t see why NCDOR would have to know exactly WHAT you purchased, but just a total amount to tax you for should legally suffice.

  • smitty
    04/20 03:44 PM

    NC cannot charge sales tax on anything purchased out of state, they are trying to collect USE tax.  So what does this apply to?  If you in NC buy a dildo on Amazon, and send it to your mom in North Dakota as a gift, can you be charged the NC use tax?

    Amazon does not have an unfair advantage, any brick and mortar store can run a mail order business.

  • Micah
    04/20 04:04 PM

    Smitty, As I said, the current tax codes involving use tax and intrastate collections will change in due time.  Use tax within NC is perfectly legal right now just not enforceable across state lines.  From the Dept. of Revenues perspective too much is being lost across state lines.  If I buy my mom a dildo from Amazon and send it to her in North Dakota, then I would pay sales tax in N. Dakota.  The same is true for Kansas, Kentucky, New York and Washington state.  There are several other places where Amazon maintains offices where I might pay tax that I am not going to research.  Also, Amazon Marketplace vendors are responsible for collection of legally appropriate sales taxes on their items depending on their physical location and shipping destination.

  • ct
    04/20 04:09 PM

    When you file your North Carolina income tax return (the D-400), don’t you read the instructions for Line 19? It’s there in black and white. Or don’t you follow the instructions that TurboTax gives you?

    If you have records of everything you purchased out of state, there is a worksheet for D-400 to calculate the use tax that you owe to NC. If you don’t have records, there is an alternative worksheet that lets you pay a percentage of your income as use tax.

    I am not a lawyer, a CPA, or a tax expert. That said… if you buy from Amazon, etc and you ignore Line 19, you will have an uncomfortable discussion if you are audited by NCDOR.

  • smitty
    04/20 04:41 PM

    Micah, how do you know it will change?  Apparently NC and Amazon don’t seem to think so or they wouldn’t be going to court.  How will you pay sales tax in ND?  If you receive the dildo in NC and don’t USE it and send it to your mom, do you owe use tax?  Does your mom owe the tax?  Additionally, if NC wants to charge you use tax, they do need to know exactly what you bought.  A dildo would be taxed at 5.75%.  A case of Indomie Mi Goreng would be taxed at 2% because it’s food.  The instructions from the NCDOR are no help either.  The state does not require you to keep records of out of state purchases. You can however choose to pay an arbitrary amount from a table if you didn’t keep records.  Or if you think the table is wrong, you can guess.  From http://www.dornc.com/faq/use.html “If you believe the estimate from the table is too high for your out-of-state purchases, you may estimate what you think you owe.”  What do you think you owe?  I think that’s a pretty interesting question.

  • T-Plain
    04/20 04:41 PM

    Why is NCDOR just going for Amazon? Because they’re big?

    I hope Amazon wins, not because I haven’t been paying taxes, but because the NCDOR is trying to squeeze blood from the turnips that elected them, during a recession, despite having supplied absolutely no service to earn the tax.

  • Micah
    04/20 05:21 PM

    Smitty, the tax codes in every state and most municipalities across the USA have been thinking on how to change their codes to more aggressively collect income tax on intrastate purchases, mainly due to the internet and the accompanying lack of “physical location” in some states. This has been a growing concern for years. Lack of physical location in many states, NC included, prevents the retailer from being forced to collect taxes for particular states, though some do so voluntarily.  I know it will change firstly because it already is in some states, and secondly because those in charge of state budgets cannot sleep at night thinking of the millions upon millions of lost revenue this presents to some states.  So far as moms dildo:  If I buy it and have it shipped to her in N. Dakota, I will pay N. Dakota sales tax since Amazon has a physical presence there and that is where the item will be “used”.  If it is shipped to me in Raleigh, then no tax will be charged.  Some online retailers use credit card billing as proof of where the item will be “used” and if this were the case with the dildo, then I wouldn’t pay tax since my billing address is in NC.  This is not the case with Amazon as they use shipping addresses.  The last part of your last post regarding questions and confusion is exactly the problem, and this will be remedied in due time so the states can get their money!  I know exactly what I bought last year from all sources, and it is pretty easy to categorize things by which tax applies.  I know that I am an extreme minority bookkeeper in this case though, and in the end the state will never trust the consumer to report their own taxes owed.  I don’t know what will happen, but rest assured something will change.

  • smitty
    04/20 07:06 PM

    I’m not going to hold my breath.  NC use tax has been around since 1939 and has been on state income tax forms since 1990.  Here’s an article about pretty much the same stuff from 10 years ago http://www.wnd.com/news/article.asp?ARTICLE_ID=17317

  • Micah
    04/20 08:03 PM

    Things are a lot different today with online commerce compared to 10, even 5 years ago. The numbers are huge enough now to warrant serious attention from the tax man.

  • ct
    04/20 09:40 PM

    NCDOR is pursuing Amazon because it’s a good test case. If NCDOR wins, all other multi-state retailers will fall in line. Amazon, on the other hand, wants to preserve as much of its advantage over local stores (whose sales are taxed) as it possibly can. I believe the use tax is fair. Not only would the absence of a use tax put the screws to local retailers who employ people locally, it would also create inequity between those who have Internet access and those who don’t—my 80-something parents, for example, or most of the people who live in poverty. They pay tax at the point of sale. In any event, with the State sucking for every dime of revenue during this recession, the use tax is not going to disappear.

  • Micah
    04/20 10:01 PM

    I don’t think anyone thinks that the use tax is going to disappear, it is just going to be more strictly enforced by some means.

  • David
    04/21 11:32 AM

    The idea that this is a discussion about the use tax, or Amazon’s ‘advantage’ over local stores is just off.  This is a discussion about your privacy and NCDOR’s complete disregard for your privacy rights.  Having a problem with the tax itself is another discussion entirely.

  • Betsy
    04/21 12:16 PM

    David—EXACTLY. The issue here isn’t what NC taxes, it’s the Department of Revenue having its employees all up in every person’s private business.  “The government”, as people like to call it, can’t do that.  NOT ALLOWED. 
    .

    They can audit us, they can bring charges against a particular person if they have evidence to do so, but they CAN’T GO ON A FREAKING GENERAL WITCH HUNT against our own citizenry.
    .

    Basic Fourth Amendment stuff.
    .

    I don’t know WHAT lawyer at the Dept of Revenue forgot this, but they were asking for a lawsuit (and they got one!

  • ct
    04/21 12:33 PM

    The Amazon suit isn’t based on the 4th Amendment. They sued under the 1st Amendment. Read the suit at http://tinyurl.com/y7u82wf .

    Courts have dealt with conflicts between the Bill of Rights and the powers of taxation authorities before. Most of the time, courts have granted broad latitude to taxation authorities. Personally I expect Amazon to lose, but economically they’re making the right decision to fight it. And make no mistake, Amazon’s invocation of the 1st Amendment is merely a tactic. Amazon simply wants to enjoy its practically tax-exempt status as long as it can.

  • Betsy
    04/21 01:56 PM

    Yes, I read the whole complaint.  Yes, it is based on the First Amendment.  Which is great, but there’s a Fourth Amendment issue, too.  The right to be free from unreasonable search. 
    .
    The gov’t can’t just come in and say “Turn over your stuff, we want to root through it and see if we find anything”
    .
    To do that requires a search warrant from a judge, and the search warrant has to be based on the gov’t showing the judge a reasonable, specific suspicion for the person it’s issued against. 
    .
    That means something more than “We’re the government, and like to know what you’ve been up to.”

  • ct
    04/21 02:00 PM

    There’s a long history of interpreting the 4th Amendment by the Supreme Court. In part it hangs on the definitions of ‘search’ and ‘seizure’; NCDOR might or might not fall under those definitions. It’s a very technical issue under the law. The Supreme Court has also ruled that the 4th Amendment is not absolute—likewise for the rest of the Bill of Rights. I’m sure the Amazom lawyers did their homework and decided it was pointless to push the 4th Amendment.

  • ct
    04/21 02:22 PM

    I meant to add: Congress found it necessary to pass the Video Privacy Protection Act of 1988 because the 4th Amendment, by itself, wasn’t sufficient. (Amazon is also suing NCDOR under the VPPA.) Even the VPPA, however, allows disclosures under certain circumstances without a search warrant.

  • radar
    04/21 09:27 PM

    NCDOR doesnt necessarily want to know what you bought, just how much you spent. Amazon is a huge marketplace where virtually anything can be purchased. If the state asks Amazon to provide them with a person’s name and amount spent(without asking for specific items), thats likely to be deemed OK by the courts, since it tells the state NOTHING about what you actually purchased.
    People are more than happy to provide receipts to the IRS when it means they can deduct purchases as a tax write-off, but when it means they have to pay tax, all of sudden its ” get the govt out of my business!”.

    And for all those bozos who are yelling about “wheres my tax refund!?”, the state cant give you money it doesnt have. It sends checks as it receives the money. It cant bounce checks.
    The solution to getting faster refunds is….more revenue!...from things like collecting sales and use tax!

  • Fred
    04/21 11:34 PM

    @radar:
    Dude, WTF? I work for the state and I have co-workers who will probably lose their jobs in the new budget, so by your logic, I should just shrug my shoulders, say, “yep, the state’s hard up!” and hand over the civil liberties guaranteed under the bill of rights?

  • Anonymous Internet Genius
    04/22 11:44 AM

    So wait a minute? All of you eurosocialists who generally support the power of the state to confiscate your money and fund entitlement programs are going to get POed over having to pay taxes? HAH! This is the height of hypocrisy.

  • radar
    04/22 04:21 PM

    @Fred
    The State of NC has like 80,000+ employess, and the Governors budget calls for cutting a total of 600(mostly vacant!) positions, so I doubt your friends are in trouble.
    And what specific “civil liberties” do you mean? 1st Amendment(the State wont know what you bought)
    4th Amendment(the State knowing you spent $400 at Amazon probably doesn’t constitute and unreasonable search if they have no idea what you bought), and they’re not searching your person or possessions. If you want to get all worked up about 4th Amendment violations, worry that Obama extended the supremely unconstitutional Patriot Act.

    @Internet Genius…right on

  • Fred
    04/22 04:44 PM

    radar,
    No, I’m quite sure that my co-workers are getting the axe. I’ve read the budget and the emails that my department’s management is sending out. They are definitely on the block. Not only are these good folks likely out of a job, they provide a service that I depend on to do my job. So what I’m saying is I’m extremely motivated for everybody to pay their taxes so my friends can put food on the table and I can be successful at my job.

    But the bottom line is, should the DOR be allowed to summon my bank records, absent probable cause to show that I might have done something illegal? Sure, my bank records are a record of the commerce that I conduct and the income I take in, but without some probable cause, they’ve got no right to. 

    (Ah, WTF do I care about setting this straight? Blog comments are for people who’s minds are made up and they ain’t gonna change. Myself included. )

  • Fred
    04/22 04:47 PM

    and, against my better judgement, a clarification, cause I know somebody’s gonna jump all over me for this: The example of my bank records was an example for illustrative purposes. I _do_ understand that DOR is _not_ trying to actually summon my bank records. Duh.

  • ct
    04/22 05:14 PM

    Under state law, NCDOR may issue its own subpoenas when investigating tax matters. They do not have ask a judge to issue one. Failure to comply with such a subpoena is a crime in North Carolina for which you can be prosecuted. You can try to get an NCDOR subpoena quashed by a judge, but don’t bet on it. I’m 99.9% certain that SCOTUS has held that such subpoenas do not violate the 4th Amendment. A subpoena duly issued persuant to the laws of a state is not a “search” or “seizure” under the 4th Amendment.

  • David
    04/22 05:23 PM

    You guys can defend NCDOR all you want, but it comes down to my personal right to privacy. It has nothing to do with subpoenaing information or a dollar value on my purchases or making me pay for that matter.  It has everything to do with them knowing every book I read, every movie I watch, every trinket I buy.  They can’t subpoena your library records, and they shouldn’t be able to get an exact list of the things I have bought.

  • ct
    04/22 05:32 PM

    I’m not defending NCDOR; I’m just reporting what the law says. Write your legislator. In the meantime, the US courts will have to decide whether NCDOR overstepped its authority or not. As to one’s privacy, cash purchases are still the best way (probably the ONLY way) to preserve it.

  • corey3rd
    04/27 05:07 PM

    I’ve been told the guy who owns the Regulator Bookstore in Durham pushed the state into going after Amazon. I won’t be dropping by his establishment anymore since he’s all in favor of Big Brother going through my video and book collection. What a rat.

  • Scott
    04/27 05:36 PM

    If this state were run in a fiscally responsible fashion, there wouldn’t be any need to go after web purchasers. The DOR is just highlighting its ineffectiveness in this latest waste of taxpayer monies.

  • jp
    04/30 01:30 PM

    bottom line is bev purdue sucks. great that tax $$ is going to this.

  • matt w
    04/30 02:14 PM

    It would be political suicide for Purdue to collect back use-taxes on unclaimed Amazon purchases.  Purdue’s administration has been a disaster already, guess there’s no harm in making it worse.


    I’m pretty much a dyed-in-the-wool liberal, but anyone that couldn’t see that McCrory was far and away the best candidate for governor two years ago is a fool.

  • James
    05/30 02:27 PM

    Well, I guess it is welcome to the police state. NCDOR was provided with the amounts of all purchases. Now they want to know what we purchased. What happened to the 1st and 4th amendments to the Constitution? Bev Perdue is too darn busy trying to get legal marijuana to get tax money. And she can not seem to find the time to pay out refunds to those that are owed them. She will be 1 term!

  • James
    06/15 09:51 AM

    Good Day Bev Perdue,

    Madam Governor, get off your rear end and LEAD. The State of NC is a joke. If I paid my bills the way tax refunds are paid I would be in collections. And where DO YOU get the right to dictate and interest rate less than inflation? 5% per year compounded annually?

    I like others have bills to pay. I am beginning to wonder what else you can screw up. But hey you have a great Facebook page.

    Now you are suing Amazon to know WHAT WE READ? What happened to the First Amendment? The 4th Amendment? You have read the Constitution haven’t you? If not let me know and I will send you my copy to read.

    It is one thing to insure proper tax collection and another to play Fahrenheit 454. It is actions like this that make us (NC) look like 1950’s Mississippi in our backwardness.

  • dave
    07/23 09:45 PM

    Here is my proplem I bought out of state goods in 2006 the products msrp was 6000.00 but I got it for 4000.00 went and pick it up from dealer they said I did not owe tax. 4 years later ncdor is trying to collect 800.00 on the 6000 so they do not even know what I paid for it. that’s 25% pecent of what I paid for it, now most people do not know all tax laws so I feel the dealer should share in the cost when I get it knock down. The truth is the product never left the state I bought it in it was a auction item and I keep it at my fathers house in the state where I bought it. The dealer should have paid the says tax because the 4000.00 was a out the door deal. The thing is ncdor does not really have good info so any one can use a false name and address on the falt lies on the peron name used

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