Following media coverage of Amazon.com's legal challenge to North Carolina's attempts to collect sales tax for online sales, a New York Times editorial characterized the retail giant's federal court action as a "losing battle to defend its longstanding practice of not collecting sales taxes in most states where it does business."
Amazon.com had contended that North Carolina's request for information regarding customer purchases was overbroad and that it jeopardized reader privacy. The state responded by noting that it had not requested information regarding specific titles, but, rather, only information regarding the type of purchase made, for example, "a book."
The Times' May 7 editorial summarized Amazon.com's "roundabout" legal argument as a contention "that it and its customers have a First Amendment right to tax avoidance."
Amazon.com's lawsuit is its latest fight with North Carolina regarding sales and use tax laws. In August 2009, when North Carolina passed legislation to require online retailers with affiliates in the state to collect sales tax, Amazon.com quickly fired its in-state affiliates to avoid collecting sales tax. However, state residents still must pay a use tax on online purchases, and North Carolina noted it had sought customer information from the online giant in an effort to collect those monies.
Noting that a tax is legally due for purchases from Amazon made by North Carolina residents, the editorial stated, "This case is not really about privacy and free speech. It's about how far Amazon is willing to go to protect a business model that relies on not collecting sales tax. Noncollection gives Amazon a major unfair advantage over rival retailers that do collect sales tax and deprives hard-pressed states of much-needed revenue."
Citing New York State's legislation, passed in 2008, that ensures that online retailers collect sales tax as a "smart law" and a potential "model for other states," the Times editorial concluded by noting, "One way or another, it seems inevitable all online retailers will collect sales taxes. The only question is when."