North Carolina is entitled to sales tax, not customer purchase records

THE recent ruling by federal Judge Marsha Pechman denying the North Carolina Department of Revenue certain records from Amazon settles an issue of constitutional rights. On that, this page agrees with Amazon. On the issue of taxing Internet commerce, we agree with North Carolina.

Under a 1992 Supreme Court ruling, Amazon does not have to collect a state's sales tax unless it has a physical presence there. It collects the tax in Washington, Kentucky, Kansas, New York and North Dakota and has resisted collecting it anywhere else.

We think Amazon should have to collect and remit the tax. Internet retailing is no longer an infant industry, and Internet retailers should pay the same social freight as brick-and-mortar retailers.

A deal needs to be reached — and it should be prospective only. If, for years, a resident of North Carolina could buy from Amazon without paying tax, and all sides believed it to be legal, it is unfair for the state to change the rules retroactively and send out thousands of bills — or one bill, to Amazon.

Amazon, and all its Internet competitors, should have to pay state sales taxes in the future. If the law doesn't allow it, the law should be changed. That is the reasonable ending to this battle in the courts.

Unfortunately, the battle over taxes threatened collateral damage to people's rights. North Carolina demanded an electronic list of Amazon's sales to state residents from Aug. 1, 2003, to Feb. 28, 2010. Amazon sent a list of purchases by date, price and buyer's ZIP code. The list contained codes that identify the product — but it did not reveal names, addresses and phone numbers of the buyers.

North Carolina said to the public, including The Seattle Times, that it didn't want to know what books, films, etc., any individual bought. But, according to Amazon, it asked for "all" information about the purchases. And "all" means it would know.

That is not acceptable.

The American Civil Liberties Union intervened in the lawsuit on behalf of seven Amazon customers. One is a woman who had an abusive husband and bought a book on how to beat him in divorce court. One is a woman who privately buys liberal books such as Al Franken's "Lies and the Lying Liars Who Tell Them," and doesn't want her colleagues at a big corporation to know. Another is a law student who reads libertarian books such as Thomas E. Woods' "Who Killed the Constitution?" and doesn't want her professors to know.

In her ruling, Pechman said, "Citizens are entitled to receive information and ideas through books, films, and other expressive materials anonymously."

That's right. The state's legitimate interest is in the money, not the names.