North Carolina's tax collectors VS Amazon (and us)

[SameOldStory]

I haven't seen this anywhere else so -

N.C. defends request for Amazon customer records

"North Carolina's tax collectors said Wednesday that they never demanded personal information such as book titles from Amazon.com"

"In a letter to Amazon dated December 1, 2009, Romey McCoy, the state Department of Revenue's audit manager, asked for "all information" relating to nearly 50 million purchases that customers in that state had made between 2003 and 2010. McCoy's letter did not exempt the titles of books or Blu-ray movies and did not address the privacy implications of the request."

"McCoy replied in a second letter on March 19, 2010, saying Amazon had until this Monday to divulge the full records of each transaction or North Carolina "will" take legal action"

" 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."

"Update late Wednesday: Beth Stevenson, the North Carolina Department of Revenue's director of public affairs, sent me this statement: "As mentioned in our previous statement, the Department of Revenue has not requested information regarding specific titles of books or CDs. The request for 'product/item code or description' simply requested the type of product purchased, for example, 'book.' Information regarding the type of product is necessary to determine the correct rate of tax."

Thats clear. NC must tax books at a different rate than things like a TV.
And NO ONE would mistake the request for a "product code" as a request for a product code identifying the book/item.

Remember that old song that ended in "and the land of the free"?

[ardeegee]

North Carolina and Amazon have been at war for a while. Here's an article from last year:

http://online.wsj.com/article/SB124603593605261787.html

[calvin-c]

Also there's little that's newsworthy in this, other than that they're trying to collect sales tax on Internet purchases. Legally Internet purchases would be considered mail order and, were it not for a specific exemption (which I believe has expired) they could have been collecting sales taxes all along. Most people think that mail order purchases are exempt from sales tax but, in most jurisdictions, the only way they're treated differently is that the seller is exempt from collecting them. Legally the buyer is still supposed to pay the sales tax-but the only place I've ever heard that's tried to enforce that is NY and I think they gave up on it. So mail order purchases have been 'de facto' exempt, but not 'de jure'. Since the Internet lost its federal exemption (I think-haven't checked but don't see how NC could even try to collect if it hadn't) it can be treated the same as any other mail order outlet-and it appears that NC is trying to do that.

As for the request for 'full records', I think that's a wording issue. I'm reasonably certain that, given the matter at hand (sales tax) NC would be satisfied with the full financial records, i.e. who purchased from Amazon & how much they paid. I doubt they're really interested in what was purchased.

[HarryT]

Presumably anyone who failed to declare internet purchases on their tax return would be liable to prosecution for tax evasion?

[ImogenRose]

Is that the case in all states (that we need to declare all our internet purchases in our tax returns)?

[TallMomof2]

I know that you're supposed to pay taxes on out of state purchases in Virginia, too. Virginia was asking for sales tax on all out of state purchases long before internet buying became so popular. This includes not only mail order purchases but also driving to North Carolina (or another state) and buying furniture (it's usually a bit cheaper in NC). Very few people declare out of state purchases on the state income tax form.

[Tamara]

Originally Posted by HarryT

Presumably anyone who failed to declare internet purchases on their tax return would be liable to prosecution for tax evasion?

That's what you are supposed to do but most people aren't aware of what forms they are supposed to file with their respective state.

[TallMomof2]

Or don't keep records. 20 years ago we could deduct state sales tax off of the federal return. I would keep every single paper receipt in a shoe box so that I could add them up for my deduction.

The states have been pushing for all retailers (Amazon, Ebay, etc.) to collect sales tax for their individual state not just in the states where the retailer has a physical presence. That would be a nightmare for small business owners such as myself who sell online. As it stands we only collect Virginia sales tax and in-state sales only account for 5% of our business.

[SirBC]

Originally Posted by ImogenRose

Is that the case in all states (that we need to declare all our internet purchases in our tax returns)?

As a business owner I received a form from the IRS this year requiring me to fill out a form and register with them specifically so they can now monitor my "use tax". I was asked to report the last three years dollar amount of goods I purchased out of state and did not pay sales tax on. Every one in my profession in the state received this form this year.

Almost 100% of my purchases that I did not pay tax on were from Amazon. Amazon will let you look at your purchases by year, which is helpful in determining money spent, but they do not give you an easy way of finding out what you spend in a year other than going through one by one and adding it up. For a company that markets itself with it's no sales tax policy you would think they would offer a way to make it easier to report this on tax forms.

[cheerio6414]

I always thought they could only charge a tax from where the company that was selling the product was from. Is amazon in North Carolina?

[TallMomof2]

Many states require you to report purchases made outside the your state and pay sales tax on it. AFAIK, it's not stringently enforced at least not here.

[jament]

It's going to be enforced more, as states look for revenue and the internet economy grows.

States have now formed the Streamlined Sales Tax Project. There are 23 member states now, I think.

The goal of that project is to develop uniform guidelines, forms and collection procedures to lower the burden on businesses like Amazon as they move towards forcing them to collect sales tax. So, internet retailers would be collecting and remitting sales tax on behalf of states and hundreds of taxing authorities in the states.

The movement is on, though, and you'll see more and more 'net retailers collecting sales tax based on where the product is delivered.

[calvin-c]

Originally Posted by HarryT

Presumably anyone who failed to declare internet purchases on their tax return would be liable to prosecution for tax evasion?

As a general rule, yes, you would be liable-but you would probably not be prosecuted unless somebody pushed it, e.g. you publicly started a civil disobedience campaign, some politician decided they should start prosecuting for this, or something. (Maybe you just p***d off the wrong politician?)

At least that's what I believe the situation would be in many jurisdictions. Sales tax, in the US, is imposed by 'local' laws (sometimes at the state level, sometimes at the city level) so the exact wording-and therefore the situations-vary by jurisdiction. IANAL so I could be wrong, but I don't think I am-at least not about my local area.

[rmm200]

One thing this will do is make states like Oregon, with no sales tax, even more appealing. Remember - sales taxes are not an act of God - voters put them in, and voters can eliminate them.

Robert

[SameOldStory]

Originally Posted by rmm200

One thing this will do is make states like Oregon, with no sales tax, even more appealing. Remember - sales taxes are not an act of God - voters put them in, and voters can eliminate them.

Robert

Unfortunately politicians say that THEY are going to give us this or that. And the people keep voting for them. After all they’re going to get services for free!

But lets not talk dirty.

So most of the states want to collect tax on out of state sales. With the budget shortfalls they have the incentive to go after it, now more than ever.

Question - Is there anyone from a country that ONLY charges VAT? As apposed to income tax plus a smaller VAT.

Are you happy with the single VAT system?