North Carolina Offers Tax Amnesty To Online Retailers

by Leroy Baker, Tax-News.com, New York

26 April 2010

The North Carolina Department of Revenue (NCDR) is seeking to attract e-commerce retailers to its sales tax collection scheme, known as the 'Internet Transactions Resolution Program', by offering to forget about uncollected tax in the past.

“This is about fairness and uniformly collecting taxes due the State from all retailers,” said Secretary Kenneth R. Lay. “Small businesses, the brick and mortar operations, are at a competitive disadvantage when they have to collect sales tax that other businesses do not.”

The NCDR quoted University of Tennessee Research which indicated that, in the absence of remedial measures, North Carolina will lose USD161.8m sales tax revenue from e-commerce transactions in 2010, growing to USD190.2m in 2011 and USD213.8m in 2012.

The Internet Transactions Resolution Program offers retailers that have operated an affiliate program in North Carolina a way to resolve their liability to the State. E-commerce retailers can contact the Department for detailed information about eligibility and participation.

Businesses that participate in the program will not be assessed tax, penalties and interest for prior liability in exchange for agreeing to collect sales and use tax in the future.

“Participation in this program benefits the State, e-commerce and traditional retailers,” Secretary Lay said. “The Department is committed to supporting North Carolina business and facilitating the equitable collection of taxes from all taxpayers both individual and corporate.”

A further advantage to NCDR, if this Program were successful, would be to isolate major E-commerce retailer Amazon.com in its legal campaign against NCDR.

Amazon has argued that it was unconstitutional for NCDR to demand full details of customer purchases of books and other media, as this threatened First Amendment rights to privacy and freedom of expression.

The NCDR had been auditing Amazon’s compliance with state sales and use tax laws and Amazon said it had provided reams of information about its sales in North Carolina, dating back to 2003 – nearly 50 million items in all.

In spite of this cooperation, the NCDR threatened Amazon with an administrative summons and summary contempt proceeding if it did not turn over the name and address of each customer.

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