(CNet) Amazon.com filed a lawsuit on Monday to fend off a sweeping demand from North Carolina's tax collectors: detailed records including names and addresses of customers and information about exactly what they purchased.
The lawsuit says the demand violates the privacy and First Amendment rights of Amazon's customers. North Carolina's Department of Revenue had ordered the online retailer to provide full details on nearly 50 million purchases made by state residents between 2003 and 2010.
Amazon is asking a federal judge in Seattle to rule that the demand is illegal, and left open the possibility of requesting a preliminary injunction against North Carolina's tax collectors.
"The best-case scenario for customers would be where the North Carolina Department of Revenue withdraws their demand because they recognize that it violates the privacy rights of North Carolina residents," Amazon spokesperson Mary Osako told CNET.
Because Amazon has no offices or warehouses in North Carolina, it's not required to collect the customary 5.75 percent sales tax on shipments, although tax collectors have reminded residents that what's known as a use tax applies on anything "purchased or received" through the mail. The dispute arose out of what had otherwise been a routine sales and use tax audit of Amazon by North Carolina's tax agency.
Amazon did provide the state tax collectors with anonymized information about which items were shipped to which zip codes. But North Carolina threatened to sue if the retailer did not also divulge the names and addresses linked to each order--in other words, personally identifiable information that could be used to collect additional use taxes that might be owed by state residents."Despite assurances from tax collectors that the era of Big Brother isn't here, they seem to be doing a lot to rewrite the book for modern times," Pete Sepp, the executive vice president for the National Taxpayers Union, told CNET. "Unless Amazon succeeds, extraordinary demands like these could become the norm."
[The complaint] adds that there is "no discernible need" for tax collectors "to know the identities and other personal information linking specific customers with any purchase, much less purchases of books, movies, music and other expressive works."
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." The justices tossed out a subpoena from police to the Tattered Cover Bookstore asking for information about what books a certain customer had purchased.
And in a 2007 case, federal prosecutors tried unsuccessfully to force Amazon to identify thousands of innocent customers who bought books online, but abandoned the idea after a judge rebuked them.
[...](Bloomberg's report is quite short on this case)
In addition, a federal law called the Video Privacy Protection Act makes it illegal for anyone selling movies to disclose customer information to anyone, including state tax collectors. The 1988 law specifically covers "prerecorded video cassette tapes," and also sweeps in "similar audio visual material" such as DVDs and Blu-ray discs.
North Carolina's aggressive push for customer records comes as other states are experimenting with new ways to collect taxes from online retailers. California may require retailers to report the total dollar value of purchases made by each state resident, as CNET reported last month, and Colorado already has enacted such a law. A decision is expected at any time in a related case that Amazon filed against New York state.
Last year, Amazon discontinued its affiliate program in North Carolina, which provides referrers with a small slice of the transaction, after the state legislature enacted a new law that would have used that program to force the company to collect sales taxes.