The state of North Carolina has been after Amazon for some time now to turn over detailed customer records so that they can can charge residents of the state appropriate “use tax” on every item they’ve ordered from the retailer.

While Amazon doesn’t have to charge state taxes in locations where it doesn’t have a physical presence, consumers are supposed to report each item purchased out of state and pay a use tax on those. The problem is that most citizens are not aware that such a thing exists, and even if they do, they see no need to report it on their state income taxes as they feel the state will never know.

North Carolina vs AmazonThe problem is that with almost every state in the country facing budget crunches, they want every dollar they can get their hands on.  With this in mind, North Carolina threatened to sue Amazon for detailed customer data back in April.  The retailer had already turned over anonymous data to the state, but was refusing to give them any information that directly linked customers with what they had purchased citing privacy concerns.

Amazon took it to the courts, and according to CNET, U.S. District Judge Marsha Pechman in Washington state gave a summary judgement in favor of the retailer.  She stated that the request ran afoul of the first amendment, and that the state had “no legitimate need” for such detailed records.

Judge Pechman did, however, leave the door open to the state requesting information in other formats.

Issuing the declaratory relief as phrased does not prohibit [N.C. tax collectors] from issuing a new request for information as to only the names and addresses of Amazon’s customers and general product information, assuming that [the state] destroys any detailed information that it currently possesses.

In an email statement to CNET, the North Carolina Department of Revenue said, “Attorneys with our office are currently reviewing the ruling, and no decision has been made yet about whether or not the State will seek an appeal.”

While the state is well within its rights to want to collect a tax that is on the books, typically a person filing would put down “DVD” as opposed to “Dirty Dancing DVD”, (although, owning that movie should be considered a crime), and that’s where the whole problem is.  The state would know the title of everything you’ve purchased, and that is just simply not within its rights.

One does have to wonder how much North Carolina has now spent trying to collect this tax money, and if they would even come out ahead at this point.

What say you?  Is North Carolina entitled to this information?