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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: And the purpose?
By sinful on 4/20/2010 8:27:47 PM , Rating: 2
Why does the government knowingly pay 10 times the going rate for contracted services when the people doing the work could get paid the same if they would be hired by the government directly? Why is it that we don't see government looking at COSTS as the reason for budget problems, rather than on just looking at increasing tax revenue dollars as the solution?

ZOMG you've suggested SOCIALISM as a way to reduce costs!

The Republican party DEMANDS that the government create inefficiency by hiring contractors to do those jobs. Anything else is socialism!!

Keep the government out of the private sector by making them use wasteful contractors, then complain about wasteful spending!

RE: And the purpose?
By Kurz on 4/21/2010 9:43:28 AM , Rating: 2
Well it all stems back that the government has a credit card. Its the Currency of the people, and Taxation, and Loans it takes.

Meh if we had a fixed rate Currency we would have stable growth and prosperity instead of these constant up and down business cycles.

RE: And the purpose?
By Newspapercrane on 4/21/2010 10:19:41 AM , Rating: 2
How exactly would one go about creating a "Fixed Rate Currency"?

RE: And the purpose?
By Ammohunt on 4/29/2010 3:36:45 PM , Rating: 2
He is talking about the gold standard which if you analyze the the valid reasons it was abandonded is not a good idea to go back to it.

"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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