Local Politics

State: Amazon customer data 'issue of fairness'

Posted April 21, 2010

— North Carolina Revenue Secretary Ken Lay said Wednesday that the state isn't interested in people's reading, listening or viewing preferences. Officials just want customer information from Amazon.com so they can collect sales taxes.

The online retail giant filed suit Monday in federal court in Seattle to block the North Carolina Department of Revenue's attempts to get the names and addresses of North Carolina residents who bought or received items from Amazon since August 2003. The information would cover about 50 million purchases, the company said.

North Carolina Department of Revenue Secretary Ken Lay N.C. doesn't care about people's buying habits

Amazon alleged in the suit that the Revenue Department's efforts violate the First Amendment rights of customers "on a massive scale," noting people's buying habits might change if the government had access to the details of the books, movies and music they were buying.

Lay said in a statement Wednesday that state officials just want the detailed information of Amazon's sales to North Carolina addresses so they can accurately collect sales tax on the transactions.

The stance contradicts a statement made Tuesday by a Revenue Department spokeswoman, who said the customer data wasn't an effort to collect back taxes and was solely part of the department's audit of Amazon's compliance with state tax laws.

"This is really an issue of fairness and equity for small businesses – the brick-and-mortar, corner-store operations," Lay said. "These businesses are at a competitive disadvantage when they have to collect sales taxes that other businesses do not."

Because Amazon has no offices or warehouses in North Carolina, the company isn't required to collect the customary sales tax on shipments. North Carolina requests voluntary compliance from taxpayers, asking them to include a "consumer use tax" on their individual income tax returns for anything purchased or received through the mail.

Last year, North Carolina passed a law that required out-of-state retailers to collect sales tax in the state if they have marketing affiliates within the state. Amazon responded by ending its affiliate program in North Carolina and currently doesn't collect sales tax from North Carolina customers.

By some estimates, North Carolina loses $140 million a year in unpaid taxes from online sales.

Lay told WRAL News that other online retailers already provide the Revenue Department with customer data. He added that the state doesn't plan to pursue tax cases against every Amazon customer in North Carolina who owes back taxes, but he didn't specify a threshold that might pique the state's interest.

"For incidental things, I'm sure there won't be an issue, but for someone who is quite a large user of online services and there's a significant tax liability, then we would (go after them)," he said.

Revenue Department officials called Amazon’s suit "misleading," saying that they never asked the retailer to turn over detailed information that would reveal personal consumer preferences.

Amazon spokeswoman Mary Osako said the Revenue Department specifically asked for "all information for sales to customers with a North Carolina shipping address," including product codes or descriptions of each item.

"It’s encouraging that the North Carolina Department of Revenue now agrees that it doesn’t need the customer information it has demanded in order to complete its audit of Amazon," Osako said. "We are hopeful that the Department of Revenue’s statement will enable us to continue cooperating with the department’s audit in a way that does not compromise the privacy and First Amendment rights of our customers."

The American Civil Liberties Union of North Carolina sent a statement to Lay Wednesday asking that he "respect the privacy and First Amendment rights of North Carolina consumers" and not seek personal information from Amazon.

"It is unconstitutional and wholly unnecessary for the (Revenue Department) to gain access to private customer records that reveal which specific customers in North Carolina have ordered which specific books, music, or movies in order for the (department) to complete its audit," ACLU Executive Director Jennifer Rudinger said in the statement.


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  • affirmativediversity Apr 23, 2010

    "State: Amazon customer data 'an issue of fairness' "

    Sorry...this is an issue of INVADING MY PRIVACY! Maybe Mr. Lay should take a peek at the US Constitution and ALL citizen's RIGHT to PROTECTION AGAINST SEIZURE BY GOVERNMENT OF PERSONAL AND PRIVATE INFORMATION!

    I'm think what I purchased from Amazon.com IS PERSONAL AND PRIVATE!

    Where is that useless organization the ACLU when they might actually have a purpose?

  • ckblackm Apr 23, 2010

    Just another money grab.

  • Garnerwolf1 Apr 23, 2010

    "The state with the sale should get the taxes." Which would be a violation of the US Commerce Clause, not to mention several US Supreme Court decisions such as Quill.

  • swordmistress Apr 23, 2010

    I still think if I choose to buy something from another state, than the State of NC has no business obtaining any revenue from that purchase whatsoever. If someone in this state had what I wanted, especially locally, I'd buy it here. The state with the sale should get the taxes.

  • Adelinthe Apr 22, 2010

    The problem here, as I now understand it, is that Amazon sent the information requested in a database they're calling #1 which listed the name of the item purchased plus the price plus the zip code where it was shipped.

    Now the state wants another database showing the name of the person who purchased it plus the address where it was shipped.

    Amazon is saying if they give the state that information, any idiot with database knowledge would be able to put the two together to see exactly who purchased what, and that could be considered a breach of privacy.

    The state is saying they don't need to know what the person purchased, only the name, address, and amount so they can go for tax, although in the beginning they said it wasn't for tax, but to help small businesses know what people were interested in purchasing.

    What this will boil down to is what the state asked for in the first place versus what they were furnished.

    The error could be on the part of the state or of Amazon

  • Bendal1 Apr 22, 2010

    The problem with the "voluntary" state use tax on the state income tax form is as others have said. It's an estimate, and if you never, ever, shop online, then you're basically giving the state money you do not owe them. At the same time, though, I do not want the state knowing what online purchases my wife and I make, which they would need in order to calculate an accurate estimate of what I would owe in 'use taxes'.

    IMO the need for privacy outweighs the need of the state for revenue, but I'm sure they'll see it just the opposite.

  • ncguy Apr 22, 2010

    I'll sue amazon for privacy breach!

  • Garnerwolf1 Apr 22, 2010

    The state isn't suing anyone. Amazon is suing the state. And the use tax is voluntary in the same sense income tax is - you tell the govt how much you owe based on certain rules - the govt doesn't send you a bill at the end of the year. It's NOT voluntary in terms of choosing to pay or not to pay. Complain all you want, but at least get the facts straight. Most of you have no clue.

  • nobama Apr 22, 2010

    It's a good thing Ken Lay was appointed by Gov Perdue because he would not be able to win an election right now. Come to think of it Gov Perdue couldn't win an election right now either.

  • SemperFi... Always Apr 22, 2010

    Good ole' NC - way to represent yourselves among the other 49 states...