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Thursday, October 28, 2010

Tax Collection and the First Amendment

A ruling was handed down this week in the lawsuit between Amazon and North Carolina regarding the details of customer orders the state should be able to obtain from Amazon in order to assess sales tax on Amazon. The federal district court in Washington ruled that the First Amendment prevented North Carolina from obtaining the details is sought. The ACLU which also got involved has links to the ruling and other documents - here.

Here is a link to an Associated Press article "Judge: Free Speech Protects Amazon Buyers' Data" by Emery P. Dalesio (10/27/10) - (yes, I'm quoted at the end of it)

It seems unfortunate that tax compliance reached this point of becoming a First Amendment issue. I think the state should have been able to derive an assessment with the summary data that it received from Amazon without having to look at the details of every customer to see what county they lived in and if they were exempt.

It would also be helpful if the state could find ways to encourage its citizens to comply with the use tax laws. Have they tried a PR campaign? Do they ask those running for office and already serving if they have paid their use tax? Do state agencies pay their use tax? Is a table used so individuals don't have to keep records (except for purchases over $1,000) in computing their use tax? Is the state working with other states to get Congress to take action to try to get a workable system where remote vendors collect sales tax from all customers?

What do you think?

1 comment:

Daniel Stoica said...

Professor Nellen,

The Nexus issue has it been elevated to first amendment consideration is a clear indication of how complicated the tax system has evolved to be.

Use tax is probably one of the least "voluntarily paid" taxes.

Attempting to "fix" the consequences without reviewing intent of taxation will lead to new issues.

Thank You for sharing this awesome post.