North Carolina Provides Clarification on Amazon Use Tax Challenge

According to North Carolina Department of Revenue (NCDOR) Secretary Kenneth R. Lay, his department has no interest in obtaining, nor did it ask for, title-specific book data from Amazon.com in the state's efforts to enforce its use tax laws.

In a response to an inquiry from the American Booksellers Association, the NCDOR secretary wrote that his department is seeking to fairly and uniformly collect sales tax from both Main Street and e-commerce retailers. Lay noted, "It is unfortunate that there is so much misinformation being circulated about the Department's position." In May, ABA had written seeking further clarification from the NCDOR regarding whether or not its request for consumer purchase information had infringed on readers' privacy.

In late April, Amazon.com filed a lawsuit in the U.S. District Court for the Western District of Washington challenging a North Carolina Department of Revenue request for data on residents who made purchases from the online giant. The NCDOR requested the information in an effort to enforce use tax laws and has publicly stated it is only seeking general information, as reported by the Wall Street Journal [1]. Nonetheless, Amazon's lawsuit has sparked privacy concerns regarding the state's request, especially when the American Civil Liberties Union announced it was considering joining Amazon.com's challenge.

On May 21, ABA CEO Oren Teicher sent a letter asking Lay for clarification regarding Amazon's challenge and the NCDOR request. "There have been conflicting media reports as to the nature of the data request by your department," Teicher wrote. "Since ABA supports both the efforts by states to collect sales tax from remote retailers with clear nexus in the state and readers' right to privacy, we are writing in the hopes that you can detail as soon as possible what specific information NCDOR is seeking from Amazon.com….

"ABA would very much appreciate a clear confirmation from NCODR that its has not requested, and does not need, records from Amazon.com that would reveal what specific books a North Carolina resident has purchased."

In his response to Teicher, Lay stressed: "The Department has reiterated to Amazon and to the media that it is not interested in obtaining book titles and does not require this information in order to calculate the proper amount of tax. The Department does, however, require product codes or descriptions because this information is necessary to calculate the tax. Books, for example, are taxed at a different rate than food."

Lay added: "The Department recognizes that small businesses, including brick-and-mortar independent booksellers, are placed at a competitive disadvantage when they have to collect sales tax that other businesses do not. We remain committed to fairly and equitably collecting the sales tax to ensure a level playing field."