Amazon Wins N.C. Online Tax Case

Marketplace doesn't have to disclose customer information.

by staff writer
- Oct 28, 2010

A North Carolina judge sided with Amazon this week, ruling that the marketplace does not have to disclose the addresses of its North Carolina customers, or identifying information about the items they bought.

State Tax Commissioner Kenneth Lay had requested this information to seek uncollected taxes from North Carolina residents. However, Judge Marsha Pechman told the court Monday that providing this information would violate customers' First Amendment rights, even if the purpose was to collect unpaid sales tax. According to Pechman, Amazon did enough when it provided the state with the names of its North Carolina customers and figures on how much they spent during transactions.

Disclosing what people were reading, watching and/or listening to, as the tax commissioner requested, posed "an imminent threat of harm and chill to the exercise of the First Amendment rights," Pechman told the court.

However, she noted the sensitivity of the issue, and said that while this ruling may give Amazon a break in North Carolina, it does not mean the marketplace won't face other suits as states try to collect sales tax for online transactions.

"The court is aware of the sensitive nature of this case," she noted. "The declaratory relief issued here is of limited scope and cannot be interpreted to grant Amazon a free pass from complying with any valid tax law of North Carolina or elsewhere."

The states of New York and Colorado have also been looking for ways to collect taxes from Amazon customers. And in August, Texas billed Amazon for $269 million in uncollected sales tax from December 2005 to December 2009.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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