Amazon fights North Carolina tax probe

North Carolina has launched an audit of online retailer Amazon’s compliance with the state’s sales tax laws, our sister site AccountingWEB.com reports.

North Carolina passed a law requiring out-of-state retailers with marketing affiliates in its jurisdiction to collect sales tax on its behalf.  Affiliates are people who earn a fee for providing links to online retailers on their own Web sites. While Amazon has cut its ties with North Carolina affiliates, state officials want to seek taxes for sales during the years those affiliates were operating, even before the law was enacted.

The state asked Amazon for names and addresses of residents who purchased items from the site since 2003. Officials are seeking to establish what kind of items were purchased on Amazon under and believe that millions of dollars in uncollected sales taxes could be due on products sold.
 
“This is really an issue of fairness and equity for small businesses, the brick and mortar, corner store operations. These businesses are at a competitive disadvantage when they have to collect sales taxes that other businesses do not,” said Kenneth R Lay, the state’s secretary of revenue.

Amazon filed a counter-complaint in the US Federal District Court in Seattle, claiming the audit violates the First Amendment and customers’ privacy rights. Federal law prevents states from requiring out-of-state retailers to collect sales tax if the company does not have a physical presence in that state.

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