Amazon has filed a lawsuit in federal court in Seattle against the North Carolina Department of Revenue charging that its demand that Amazon turn over the names and addresses of all residents who bought anything from the e-tailer since 2003 is an invasion of privacy and a violation of the First Amendment. The request by North Carolina is part of that state's efforts to collect sales tax on items purchased by North Carolina residents from Amazon. In the complaint, Amazon also said North Carolina is demanding it turn over records of what each customer purchased and how much they paid. When North Carolina first announced its plans to collect sales tax from online retailers, Amazon closed down its affiliates program in the state, arguing that without that program the state had no nexus to collect sales tax.
In the complaint Amazon says it must either comply with the information request from North Carolina "and violate the privacy and First Amendment rights of Amazon and its North Carolina customers, or refuse to comply with a request from a state agency that has stated its intention to issue an administrative summons." Amazon further argued that the North Carolina tax collectors have no need "to know the identities and other personal information linking specific customers with any purchase, much less purchases of books, movies, music and other expressive works."
Brick-and-mortar stores have long lobbied for states to collect sales tax from online retailers, arguing that not doing so gives all e-tailers an unfair pricing advantage. Retailers, however, have also long championed protecting the privacy rights of customers, particularly buyers of books and other content-based material. Chris Finan, head of the American Booksellers Foundation for Free Expression, said the demand by North Carolina "is clearly a right to privacy issue." If North Carolina were successful "it would have a terrible chilling affect" on what people could comfortably buy, Finan said. He noted that Amazon has provided North Carolina with lots of information short of personal data and that "there is simply no justification for demanding to know who bought what."
The lawsuit, however, "doesn't impact one way or another on whether Amazon should pay its taxes," Finan added. He explained that often after requesting private information states tend to back down, and Finan said he hopes that after looking at the demand again, North Carolina will withdraw its request. If the case does go to trial, Finan said, ABFFE would likely "put our oar in the water" in support of Amazon.