It's Amazon Versus the Taxman in North Carolina

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Amazon is fighting back against what it calls an invasive inquiry from the state of North Carolina. The retail giant has filed a lawsuit challenging North Carolina's demand that it hand over the names and addresses of every state resident who purchased items on the site since 2003 in order to collect income taxes.

In a 14-page complaint [PDF] filed in U.S. District Court for the Western District of Washington, Amazon claims the state's request "will invade the privacy and violate the First Amendment rights of Amazon and its customers on a massive scale." Beth Stevenson, director of public affairs at the North Carolina Department of Revenue (DOR), declined to comment.

Amazon's main argument is that it has already complied with the DOR by providing "the order ID number; the city, county, and zip code to which the item was shipped; the total price for the transaction; the date of the transaction; and Amazon's standard product code for each item."

Providing more personal details about the more than 50 million orders between August 1, 2003 and February 28, 2010 could curb individuals from purchasing potentially controversial materials out of fear of disclosing their choices to the government, Amazon says. The suit uses Lolita, Fahrenheit 9/11, Brokeback Mountain, and the music of Eminem as a few examples of items that are apparently considered controversial.

New York passed a similar law last year, dubbed the "Amazon Tax," when the governor decided to tax all online purchases. Earlier this year Colorado enacted a similar law, which resulted in Amazon removing its marketing affiliates from the state. 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. Amazon has already removed itself from North Carolina and currently doesn't collect sales tax there.

According to Amazon's complaint, North Carolina is also violating the Video Privacy Protection Act of 1988, a law that makes it illegal to disclose personal information about movies rented for entertainment purposes. The Video Privacy Protection Act archaically covers "prerecorded video cassette tapes" but has language protecting "similar audio visual material."

"Despite assurances from tax collectors that the era of Big Brother isn't here, they seem to be doing a lot to rewrite the book for modern times," Pete Sepp, the executive vice president for the National Taxpayers Union, told CNET. "Unless Amazon succeeds, extraordinary demands like these could become the norm."

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