State News

State offers deal if e-retailers collect sales taxes

Posted April 23, 2010

— North Carolina tax collectors say Internet retailers have until August to agree to collect sales taxes the state says it is owed through the work of independent businesses.

The state Revenue Department said Friday that North Carolina expects to lose about $162 million in uncollected sales taxes from e-commerce transactions this year, and more than $400 million over the next two years.

The question is whether North Carolina and other states have the legal stick to hit Internet retailers if the carrot of Friday's amnesty offer doesn't work.

North Carolina and other states say they are owed sales taxes because some state residents running their own Web sites posted links driving business to companies like and then collected a share of sales.

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.

The company sued North Carolina Revenue Secretary Ken Lay this week in an effort to block the state's effort to obtain information on the online retailer's North Carolina customers to collect sales taxes from them.

Amazon says the customers have a right to keep their buying habits private, but Lay responded by saying the state just wants to collect the tax owed on purchases.

Research done by the University of Tennessee indicates that North Carolina will lose $161.8 million in sales tax revenue from e-commerce transactions in 2010, with the figure rising to $190.2 million in 2011 and $213.8 million in 2012.

“Participation in this program benefits the state, e-commerce and traditional retailers,” Lay said in a statement. “The department is committed to supporting North Carolina business and facilitating the equitable collection of taxes from all taxpayers both individual and corporate.”


This story is closed for comments.

Oldest First
View all
  • braddyg Apr 26, 2010

    "Tax Man - The so-called 'Fair Tax' is only fair to those folks at the upper levels of net income. If I were earning 1M and I only had to pay a flat tax of (let's say) $20,000 then I would be delighted by the law; if was earning $50,000 - not so much. It is a silly idea that will never become law."

    FAIR tax, not FLAT tax. A Fair tax is collected solely as a sales tax on purchases - no income tax or separate sales taxes. The more stuff you buy, the more tax you pay. That's the only fair way to tax anyone.

  • soyousay Apr 23, 2010

    libs usually fail to learn this lesson.

    and just how did you make that leap?

  • soyousay Apr 23, 2010

    don't want to live in a high taxes state. I guess we will have to vote out the tax and spend liberals running Raleigh.
    nobama do know that Raleigh does not speak for the state. No one is forcing you to stay though

  • lilluke0 Apr 23, 2010

    paulej: Thank you for the info, the real point has been made, correct? What if these CEO's give back all those extra big bonuses and just keep enough to live on how will we stand then??
    Hey, it was just thought I know it's long-shot!

  • lilluke0 Apr 23, 2010

    Who's dumb idea was this anyway, you can't go around taxing everything to balance this state's budget. You'er picking on the wrong people, try those fat cats on Wall and Main Street with their pockets stuffed full of our tax dollars. They should
    start at the top where the money is!!"Your Move"!

  • james27613 Apr 23, 2010

    Interesting what the DOR is trying to do.

    If I provide links to, or other websites and I
    get a commission on the sale, is this sale taxable in NC or
    the state where the buyer is living?

    Any commissions I get are taxable as income so NC and other
    states do get a piece of the pie, just not the sales tax pie.

  • Alexia.1 Apr 23, 2010

    lilluke0, speaking of S&H, NC charges a tax on that service, too... never mind that shipping is provided by a third party! So, if you buy a $10 item and pay $5 shipping, the tax is on $15, not $10.

    How fair is that 'use tax' sounding now?

    It's only made worse when you consider that the shipping agent is already taxed on every delivery into or out of the state. I don't know how those taxes work, but logic would tell you the more business they have the higher their taxes are.

  • lilluke0 Apr 23, 2010

    Hey, I know we'er having a tough time in this world wide down-turn but, don't try to tax what little funds I have left to stretch and buy online something nice minus state taxes S&H is fair enough!!! Thank You!

  • josephlawrence43 Apr 23, 2010

    beachboater: you got it right--the Dept of Revenue is offering this deal because they know they can't force companies to do anything. What are they going to do--cut off the internet????

  • nobama Apr 23, 2010

    I don't want to live in a high taxes state. I guess we will have to vote out the tax and spend liberals running Raleigh.