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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: They're not choir boys...
By gamerk2 on 4/20/2010 2:03:36 PM , Rating: 0
And thats a good thing; If the Feds had to have a balanced budget:

A: Taxes would shoot up much higher (at least 20%) then they are now

B: Federal assistence would all but cease, hurting the lower/middles classes and causing serious harm to economic growth

C: We wouldn't be a major military power.

States are so messed up exactly BECAUSE they are forced to balance their budgets, hence why the states have such high Property/Sales tax rates, and borrow so much. And to fix shortfalls, the only way is to borrow more, making the situation worse.

RE: They're not choir boys...
By soloman02 on 4/20/2010 4:29:07 PM , Rating: 2
So its a good thing that the feds can "invent money?" Germany tried that in the 1920's. People had wheel barrels full of money to buy basic items. Being able to "invent" more money IS the problem.

From 1800 until 1902 we experienced an overall trend of deflation. From 1903 until present day we have only experienced inflation. What cost $1 in 1902 now would cost about $25. The reason the penny, the nickel, and the dime, and the quarter were invented was because they actually could be used to buy stuff. Now the penny, nickel and dime are basically useless.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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