Amazon: NC bid to track taxes violates free speech

AmazonOnline retailer Inc. said it is taking a stand for free speech by fighting a request from North Carolina tax authorities for information on people who bought about 50 million items since 2003.

Amazon said disclosing the names and addresses of buyers, as requested, would harm customers who may have bought controversial books or movies. In a federal lawsuit filed in Seattle, the company also expressed worries that the disclosures would diminish future sales.

Amazon wants the court to rule that North Carolina’s collection effort violates the company’s rights to sell and its customers’ rights to buy books and other items “free from government intrusion into the customers’ reading, viewing and listening choices.”

Amazon is asking the U.S. District Court in Seattle, where Amazon has its headquarters, to find North Carolina’s request unconstitutional. The company said federal action would avoid varied decisions in multiple courts “in the event other states make similar demands for customer data.” The lawsuit was filed Monday.

It was not clear whether North Carolina was seeking the information to collect taxes from customers directly, or to build a case against Amazon for not having collected such taxes in the past.

State Revenue Department spokeswoman Beth Stevenson had no immediate comment Tuesday. Revenue Secretary Kenneth Lay was named in the lawsuit but was not immediately available for comment, Stevenson said.

North Carolina requires residents to pay taxes on online purchases if buying the same item in a store would result in a sales tax. But out-of-state retailers can’t be forced to collect North Carolina’s tax if it has no physical presence in the state.

Last summer, state legislators were considering a law that would have directed Amazon to collect sales taxes, arguing that Amazon had relationships with local affiliates, giving the company a physical presence. Amazon responded by cutting off business relationships with North Carolina residents who link to products on their blogs, promote Web shopping deals and offer coupons.

The company also stopped working with affiliates in Rhode Island and Colorado because of collection-enforcement laws passed in those states.

As the recession slashed tax collections, states have been stepping up efforts to collect from online retailers. In 2008, New York became the first state to treat local affiliates as enough of state presence to require retailers to collect sales taxes. Lawmakers in Iowa, New Mexico, Vermont and Virginia have considered similar laws, according to the Tax Foundation, a Washington, D.C.-based research group.

Last December, tax collectors auditing Amazon’s compliance with North Carolina laws asked for documents listing all sales to customers in the state between Aug. 1, 2003, and Feb. 28, the company said. Amazon estimated the volume at 50 million items.

The company said that to protect customer privacy, it did not provide customers’ names, addresses, phone numbers, e-mail addresses or other personally identifiable information.

State revenue agents visited Amazon’s Seattle offices for meetings about the information request last month, then hand-delivered a letter seeking the personal data by a Monday deadline, the company said. Amazon said it did not respond before filing its lawsuit.

Source: The Associated Press.