

Amazon.com sues North Carolina over customer data demand - cwan
http://www.techflash.com/seattle/2010/04/amazon_sues_north_carolina_seeking_to_block_demand_for_customer_data.html

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bouncingsoul
From a related CNET article
(<http://news.cnet.com/8301-13578_3-20002870-38.html>):

 _In a 2002 decision, the Colorado Supreme Court ruled that the First
Amendment protects "an individual's fundamental right to purchase books
anonymously, free from governmental interference." The justices tossed out a
subpoena from police to the Tattered Cover Bookstore asking for information
about what books a certain customer had purchased._

 _And in a 2007 case, federal prosecutors tried unsuccessfully to force Amazon
to identify thousands of innocent customers who bought books online, but
abandoned the idea after a judge rebuked them. Judge Stephen Crocker in
Wisconsin ruled that "the subpoena is troubling because it permits the
government to peek into the reading habits of specific individuals without
their prior knowledge or permission."_

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btilly
This is an important issue in online shopping. However it is really technical
and boring, so nobody pays attention to it. But if you live in a state with
sales tax and buy stuff over the internet, you should.

Here is the issue. State governments are allowed to levy taxes against their
residents. A common one is sales tax. If you are a resident of North Carolina,
or New York, or California, or lots of other states, then you owe sales tax on
everything you buy. However experience has shown that individuals don't keep
track of what they buy, and won't calculate or pay that tax. Therefore it is
easier for the government to get vendors to charge the tax, and then they
collect from vendors.

The problem here is that it would be unfair for any state to be able to compel
every merchant to think about their local laws. Therefore the legal principle
that has been settled on by the Supreme Court is that a state may only compel
a company follow its laws if that company has a physical presence in that
state. Otherwise that company can ignore anything that the state says, even if
said company is actually doing business with residents of the state.

Please note here that by law the tax is owed by the citizens of the state.
Collecting it from the merchant is merely a convenience. But in practice the
tax won't be collected unless the merchant does it. So the question of whether
the merchant can be compelled to collect tax is really a question about
whether that tax will be collected.

The argument that has been brewing is what "physical presence" means. In
particular Amazon is careful to avoid having employees, warehouses, etc in
states that collect sales tax. But a number of states are trying to claim that
Amazon affiliates, private people who are paid for promoting Amazon, are part
of Amazon, and can represent a physical presence that are grounds for suing
Amazon. Amazon, unsurprisingly, does not agree.

This is Amazon's latest salvo. They claim that the information being requested
invades people's right to privacy. And therefore they can't be audited.
However North Carolina doesn't actually want to know what people are reading.
They want to know how much people paid, and therefore how much tax people
failed to pay.

At stake here is billions of dollars of uncollected taxes.

~~~
csytan
This was a great summary, thanks. As I'm in the process of starting my own
online business, I've been wondering why some merchants apply sales tax, while
others forgo it.

On a related note: Does anyone have experience with sales tax for online
businesses in Canada?

