I first wrote about the sales tax issue and North Carolina’s suit against Amazon in March 2010 entitled Law Dictates Behavior and Affiliates Get the Ax. While I do find the issue of sales tax and nexus interesting (as I am an attorney, I just no longer practice) what I found most interesting was how law dictates behavior and Amazons reaction to end their relationship with all affiliates that are based in the state of North Carolina. I am not saying what they did was right or wrong, but I wrote that post in a humorous tone to point out that the state of North Carolina may have obtained a result they did not intend. That result was to end revenue for some of their citizens.
North Carolina Wants Back Sales Tax
The second article was the following month of April, 2010 about the North Carolina verse Amazon Sales Tax Issue in April of 2010, here is an update. While I do find the issue of sales tax interesting, what I found most interesting was how law dictates behavior
The issue is about sales tax. Essentially Amazon did not require those in North Carolina who bought from Amazon, from 2003 to present, to pay sales tax. A quote from a Tech Journal South article explains the nexus issue and why legally they may or may not have to require North Carolina residents to pay sales tax.
Much of the dispute revolves around the legal concept of “nexus.” Out of state retailers cannot be forced to collect sales taxes unless the retailers have a physical presence in the state, such as stores, warehouses, or other facilities. In 2009, North Carolina passed a law that said Amazon was required to collect sales taxes because it had affiliates in the state, thus creating nexus. Amazon, in response, discharged its affiliates in the state.
Personally, whether sales tax is required or not, I found the North Carolina law that they intended to use to obtain revenue had such a huge back fire and resulted in hurting some of their own citizens. Always think before you act.