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North Carolina wants a piece of digital sales

Most consumers would agree that they are taxed enough. Those who happen to live in a state that has a state income tax are taxed even higher than some consumers in America are. One of the few respites from sales tax has long been online purchases through companies who don’t have a physical presence in the state the consumer lives in.

Massive online retailers like and Apple, owner of iTunes, have spent a considerable amount of time and money fighting attempts by various states to tax digital sales. New York State passed a law that forced Amazon to add sales tax to orders for consumers in the state. Amazon filed suit against the state on the grounds that it had no physical presence in New York State, a concept called "nexus" which previously had protected online firms against such taxation. However, Amazon ultimately lost the suit because New York State was able to prove that by soliciting affiliates in the state it was effectively doing business there.  In losing, a legal precedent was set which promised to potentially undo nexus protections for online retailers across the country.

Apple's iTunes store has also drawn the eyes of lawmakers in various states looking to add tax revenue to their state coffers, inspired by recent successes. New York State was again at the forefront of the case when it tried in December of 2008 to force Apple to collect sales tax on digital sales from iTunes.

Other states are looking at the success New York State has had with getting money from digital sales and want a piece of the action. A legislative commission in North Carolina is looking at methods that could be used to tax digital downloads from sources like Amazon and iTunes.

The committee is attempting to "modernize" the North Carolina tax code, which was written long before the advent of digital sales.

Rep. Paul Luebke describes, "We used to think of everything in terms of being tangible. Nobody thought of how you could possibly download anything."

At this point, taxing digital downloads is still nothing more than a proposal and is far from becoming law. However, changes proposed by the general assembly could affect how tax laws in North Carolina are written in the future.

Luebke continues, "So if you buy a book in a bookstore, you're going to have to pay sales tax on it," Luebke said. "If you're downloading a book from a book seller, you should have to pay sales tax on that as well."

According to research taxing digital sales of music, books, movies, and software could add about $12 million to state tax revenues over the next fiscal year. That is a temptation that the state isn’t likely to pass up, considering that North Carolina is faced with a $2 billion shortfall in its budget.

CEO of the North Carolina Technology Association Brooks Railford disagrees with the proposed digital sales tax. Mr. Railford states, "We would be concerned about any kind of new taxes in this economy. The consumer is already very highly taxed, the economy is stretched. All we're asking is that those considerations be taken carefully and that the industry be asked for their input as the legislation is finalized."

One of Railford's major concerns is the impact on sales of digital good to the companies who sell them. The lack of sales tax online is often one of the key reasons consumers buy online rather than in a retail store. Adding sales tax could have a major detrimental effect on online retailers.

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RE: Hey, North Carolina...
By RandallMoore on 1/29/2009 12:27:43 PM , Rating: 1
Okay, tell me how we are excessively taxed?

You have to be just trying to stir in shit... Here goes, everyone else help me out with this list.

Taxed when you...

Spend it.
Make it.
Save it.
Have too much of it.

Do you have a cell phone? They tax that service! FOR WHAT?
TV? that too.

Guess what?... they tax college loans as income. How fucked up is that.

RE: Hey, North Carolina...
By afkrotch on 1/29/2009 1:31:37 PM , Rating: 2
Cellphone - They sell you a cellphone. Taxed on the sale. They sell you a service. Taxed on the sale. Same as TV service.

College loans (the interest at least) are tax deductible and there are tax credits. I'd like to see who got taxed on a college loan.

Now a scholarship or grant can be taxed as it is a form of income. You are getting free money to pay for your college. The tuition and related expenses portion is non-taxable.

RE: Hey, North Carolina...
By justsomeone on 1/29/2009 3:31:02 PM , Rating: 2
College loan interest is NOT tax deductible if you make more than 65K (single) and only partially deductible between 50-65K. Yeah, that ticks me off!

RE: Hey, North Carolina...
By RandallMoore on 1/30/2009 1:52:19 PM , Rating: 2
Is that why I received a letter in the mail from the NC College board informing me that I have to claim my Stafford sub. and un-sub. loans as taxable income?? Yea, you are wrong... I don't get tax credits, and I damn sure don't get any kind of financial aid. Evidently my parents have Swiss bank accounts that I don't know of.

"Folks that want porn can buy an Android phone." -- Steve Jobs
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