Amazon v. North Carolina

I almost typed Duke v. North Carolina, but the headline is accurate. Amazon filed suit earlier this week seeking to block the North Carolina Department of Revenue from obtaining records of purchases by Amazon customers who reside in North Carolina. The demand for the records is part of an audit by the North Carolina agency. It is trying to determine if Amazon complied with state sales tax laws. According to Amazon it isn’t contesting its tax liability, it is simply trying to protect customer privacy. Let’s face it, who wouldn’t be embarrassed to admit they bought the Lady Ga Ga CD? The challenge here comes from the state’s need to only tax “North Carolina” transactions. Amazon is not a like a bricks and mortar store that can charge sales tax on every sale under the law of the state where it is physically located, regardless of the customer’s home state. North Carolina can’t tax a transaction between Amazon and someone who’s not a North Carolina resident. So there has to be some method of determining which transactions it can tax. And that apparently explains the records request. But Amazon contends it has provided sufficient information without disclosing private information. Given the cash strapped status of so many local governments, this is going to be a big deal. Maybe bigger than Duke v. Carolina even.