Taxman Lost In Amazon

There is a sort of queuing process that takes place in law school. People who are good with math wind up being tax lawyers. The rest of us become media lawyers (or some other kind of lawyer that requires no more than rudimentary math skills at best). So we media types rarely encounter tax lawyers and vice versa. That’s one of the things that makes this story interesting. It’s one of those rare intersections. The short story is that Amazon prevailed in its effort to avoid providing certain information to the North Carolina Department of Revenue about its customers’ buying habits. To do so would violate the First Amendment and possibly the federal Video Privacy Protection Act. The longer story is that Amazon kind of created the problem itself. The North Carolina folks wanted to see information concerning Amazon sales to North Carolina residents so it could audit the tax due on those sales. When Amazon received the first such request, it provided full disclosure of the customers and the items purchased. When Amazon received a second request some time later, however, it decided not to provide the information. The North Carolina Revenue Department made it clear it did not need details about titles purchased. But Amazon contended that, with the information it had previously submitted, the North Carolina officials could “connect the dots.” A federal district court in Washington State agreed. According to a North Carolina spokesperson, the “case has been twisted into something it is not.” But no word yet on whether there will be an appeal. I doubt that this is the last word on the subject. In the brick and mortar world, it’s not as complicated to determine the amount of sales due the state. The sales take place at the physical location. It’s a little more complicated when the sales are global.