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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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Stupid NC
By MeatballB on 4/20/2010 1:19:34 PM , Rating: 2
I live in NC and let me tell you, these boobs running the state and local governments are idiots. Right now they're scrambling to find any/all types of money because they overspent/budgeted during the good times and didn't put any money away for when things went bad. Now things are bad and the state/local governments have run out of money.

NC is already 'delaying' sending out tax rebates because they want to hold onto the money longer and squeek out a few more pennies in interest, or for all we know they may not even have it. I think if I ever owe them money I'll tell them I'm 'delaying' payment for a few months and see what happens.

Regardless, if this passes I will vote against every incumbent in state offices next election.

RE: Stupid NC
By AntiM on 4/20/2010 3:17:04 PM , Rating: 2
I live in NC and I agree. I wouldn't be at all surprised if 50% of the tax money we pay to the state disappears through waste, fraud, abuse, and corruption. I could easily balance the state budget in 2 years. First, a 15% pay cut to ALL state employees; that includes the Governor's position. If you don't like it, find another job. I had to take a 50% cut in pay when I lost my job when I had to take lesser paying one.
Also, the NC tax form is a mind boggling exercise in stupidity.
Message to Governor Perdue,.. if you want to balance the state budget without having to resort to these petty tactics, come talk to me.

RE: Stupid NC
By fic2 on 4/20/2010 7:33:50 PM , Rating: 2
I live in Colorado. In 1992 we passed an amendment called the TABOR amendment. Basically says that the state gov't can't grow faster than inflation + population growth. The politicians have been trying to dismantle it ever since.

The last few years they have talked about being able to create a "rainy day fund" - basically an emergency fund to tied the state over in lean years. My guess is that everyday would become a "rainy" day and the politicians would not be able to keep their grubby little hands off of it.

RE: Stupid NC
By Moishe on 4/22/2010 3:44:20 PM , Rating: 1
I'm with you.

They have two options. Either get your receipts and calculate it based on what you spent, OR if you don't have receipts or don't remember, then use another calculation which is based on your income.

I live here in NC, and every year I do a tally in my head of what I bought online and I do the calculation on the state income tax form. I follow the instructions and am honest about it.

The NC government overspends ever. single. year. Then they come whining to us and claim that we're cheating them. They're douche-bags and their first instinct is not to cut spending like every sane household does, their first instinct is to bitch and moan about reduced income and then try to fleece the citizens for more money.

I see it every year, and I'm sick of it.

The government has no business getting a record of what I buy. Period.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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