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States, online retailers feud over taxes

Bob Moon Apr 21, 2010

States, online retailers feud over taxes

Bob Moon Apr 21, 2010


Kai Ryssdal: Here’s another question as a way to set up a story. Just because that seems to be the way things are going today. Completely different topic though. Would you consider it a violation of your privacy to have your name turned over to a tax collector? Amazon.com most certainly does feel that way. It’s suing over an attempt by the state of North Carolina to target customers who’ve been avoiding sales taxes. A growing number of states are feuding with Amazon, and other online retailers — companies that don’t have to collect sales taxes in states where they don’t have a physical presence.

Our senior business correspondent Bob Moon has the latest twist.

BOB MOON: Retail giants like Amazon and Overstock.com agree their customers are responsible for paying millions of dollars in sales taxes. But thanks to a U.S. Supreme Court ruling, they’re under no obligation to collect them, which gives them a leg up on their local competition. And they haven’t been much help to the strapped states that need the money.

Natasha Altamirano speaks for the Tax Foundation, a Washington think-tank.

NATASHA ALTAMIRANO: The onus on paying that is on the individual taxpayer, but it’s just pretty much an unenforceable tax.

North Carolina’s Department of Revenue sees a way around that if Amazon will simply identify residents who’ve made purchases. But Amazon argues the demand is unconstitutional, and claims it would discourage people from buying controversial books, music or movies.

At the Center on Budget and Policy Priorities, state tax expert Michael Mazerov sees that as a smokescreen.

MICHAEL MAZEROV: People buy merchandise from Amazon that costs $1,000 or $2,000 at a pop. There’s a significant amount of tax due on it, and it would be rational for the state to try to use information from Amazon to collect tax on big-ticket items.

The North Carolina tax agency’s Beth Stevenson insists there’s no need to get specific.

BETH STEVENSON: We’re not asking for any information that would jeopardize the privacy of a consumer. The information that we are requesting and that is necessary for us to properly administer tax collection would be the type of product purchased — for example, a book — and the purchase price of that book.

Amazon said today North Carolina officials had been demanding much more and suggested the company might be willing to compromise.

State and local governments have been working to standardize the tax language they use. That would help online retailers sort through more than 7,400 different tax codes across the country.

I’m Bob Moon for Marketplace.

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