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Cash strapped N.C. looks to milk money out of citizens in its battered local economy

When it comes to internet purchases, you're supposed to individually list them on your yearly tax return and then pay back sales taxes to the state.  Of course, few people do this.  Now the government of North Carolina and other states are battling and other e-tailers to get these records. this week filed suit against the North Carolina state government -- specifically, the Department of Revenue (DOR) -- claiming that the state's demand for records of virtually every North Carolina resident who has purchased anything from Amazon since 2003 was not only unreasonable, but a violation of privacy.

Amazon writes in a filing for the case, "In re: LLC vs Kenneth R. Lay", Case No. 10-00664, U.S. District Court, Western District of Washington, "[T]he DOR has no business seeking to uncover the identity of Amazon's customers who purchased expressive content, which makes up the majority of the nearly 50 million products sold to North Carolina residents during the audit period."

If the case is lost, Amazon may have to turn over the records of millions of its customers in North Carolina.  Those individuals who purchased from Amazon (but did not report their purchase on their tax returns) might be audited and face civil penalties. At the very least, they would likely be expected to repay back taxes on the items they failed to report to the government.

In North Carolina, failing to pay state sales taxes is handled as a civil infraction.  Under the codes 105 236(5)c. and 105 236(5)a., citizens can face additional fines for dodging state taxes.  The penalty would likely be to pay 25 percent more tax, except on small items, which would require taxpayers to pay only an additional 10 percent fine.

The fight is the latest in the growing trend of states hungering for internet tax revenue.  Many states have passed or are debating laws that would tax digital downloads such as those offered by Amazon, Steam, Apple's iTunes store, or others.  While many in the public have complained about excessive taxation on the federal level, it is actually the states that have been pushing the most for bigger taxes of late.  The federal government has made some mild efforts to fight taxation of the internet.

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RE: Bend over!!
By Murloc on 4/20/2010 12:10:40 PM , Rating: 2
lol I can't believe this is true.
Americans are totally crazy.

RE: Bend over!!
By Goty on 4/20/2010 12:29:19 PM , Rating: 1
Three words: Value Added Tax.

RE: Bend over!!
By gamerk2 on 4/20/2010 1:59:27 PM , Rating: 2
Agreed. Put an exemption on food/cloathing, and a refund on the Income Tax if your income falls below a certain threashold. A VAT will earn some money from the coorporate side of things, and is near impossible to dodge. A sales tax is a true progressive tax, as it affects big spenders more then anyone else.

RE: Bend over!!
By Spuke on 4/20/2010 2:11:09 PM , Rating: 2
A sales tax is a true progressive tax, as it affects big spenders more then anyone else.
I have no problem with this actually. It's like taxing gas, the more you use, the more you get taxed. If you spend less, you get taxed less. California has been in a continuous battle to get Amazon to charge CA residents sales tax.

RE: Bend over!!
By bigboxes on 4/20/2010 4:54:10 PM , Rating: 2
Sorry, a sales tax is not a progressive tax. It's a regressive tax. Although everyone is charged the same rate, it affects the poor disportionately in relation to their income. That is, it's not fair. Now, I realize that "flat taxers" don't like progressive tax rates, but for most people it's a benefit.

RE: Bend over!!
By Goty on 4/20/2010 10:55:41 PM , Rating: 2
This is why any serious flat tax proposal gives larger exemptions on necessities to those with lower income (see the fair tax).

RE: Bend over!!
By Spuke on 4/20/2010 2:03:45 PM , Rating: 5
Three words: Value Added Tax.
Three more words: Fuck That Shit.

RE: Bend over!!
By Goty on 4/20/2010 10:54:18 PM , Rating: 2
I would like to clarify my statement by saying it's hard for anyone to call us crazy when something like VAT exists elsewhere. I am in no way in favor of something like this.

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