February 10, 2011, 1:14 PM

Amazon wins another sales tax battle

North Carolina backs off requiring personal e-commerce data from the online retailer.

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In a settlement signed with the American Civil Liberties Union, North Carolina has agreed not to seek personal information related to consumers’ online purchases. The state said it wanted the information so taxing officials could determine how much sales tax North Carolina was owed for web purchases. 

The settlement follows a ruling in the U.S. District Court in Seattle last fall in a lawsuit brought by Amazon.com against the North Carolina Department of Revenue. The court said the retailer did not have to provide the state with personally identifiable information related to sales made to North Carolina residents.

The recent settlement between the state and the ACLU, which was signed last month, extends the effect of the ruling to other retailers as well.

“This settlement is a great win for privacy,” the ACLU said yesterday. “While the court's ruling concerned only the specific request issued to Amazon, the settlement covers requests to all Internet retailers who sell books, movies, music, and similar expressive materials.”

According to the settlement, a copy of which was acquired by Internet Retailer, the North Carolina Department of Revenue will not ask for information that could connect the names of consumers with the names of books or other media items they have purchased online. The revenue department specified in the settlement that, if it issues an “information document request” to an Internet retailer that sells books, movies, music or “other expressive items,” it will include the following statement: “This IDR does not request the names, titles or other identifying information from which names and titles can be derived of the books, movies, music or other expressive items sold.”

The North Carolina revenue department, however, insists that the state never intended to acquire specific product information that would tie individual consumers to the titles of the books and other media they purchased, and that the state has only sought enough information to help it enforce sales and use tax collection. Residents are required by law to pay their own use tax on items when an online retailer doesn’t charge sales tax, but few do.

“This is about fairly collecting the tax that is due to the state of North Carolina and nothing more,” the revenue department said in a statement following the settlement, adding: “This settlement only makes our position more clear to Amazon and other retailers that the department has no interest in the titles of books, movies, music or other expressive items.”

Amazon declined to comment on the settlement between the state and the ACLU, but a spokeswoman noted that the court ruling involving Amazon last fall “speaks for itself.”

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