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N.C. Revenue Dept offers deal to Internet retailers

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State tax authorities are offering a compromise to online retailers that don't charge charge the state sales tax to their North Carolina customers.

The N.C. Department of Revenue said this morning it will forgive all back sales taxes and penalties to businesses that sign an agreement by Aug. 31 to start charging customers the sales tax.

"We are going to be asking quite a number of them to participate in the program," said revenue Secretary Kenneth Lay. "We have positive indications that several will sign up."

Some e-commerce retailers already collect the sales tax voluntarily, Lay said, but the state revenue department wants all e-commerce businesses to play by the rules. As online sales grow, states lose more tax revenue each year from businesses that don't collect sales tax from their customers.

Lay said businesses that don't collect the state sales tax have an unfair advantage over merchants that add the sales tax to the cost of their products.
 
As online retailers sign up with the state's Internet Transactions Resolution Program, more state residents will pay the 5.75 percent state sales tax to out-of-state retailers who sell products in this state over the Internet.
 
The agreement will also require online retailers to collect county and local taxes, raising the tax in most counties to 7.75 percent.

According to estimates, North Carolina will lose nearly $162 million in sales tax revenue this year from businesses that don't collect the tax on North Carolina transactions. The loss will grow to nearly $214 million in 2012.

One of those that doesn't collect the money is Amazon.com. This week the online giant sued to block the state's efforts to collect information on online sales. The revenue department is auditing Amazon.com to determine how much it owes the state in uncollected sales tax.
 
The U.S. Supreme Court ruled nearly two decades ago that out-of-state merchants don't have to pay sales tax unless they have an office in the state. But last year the N.C. General Assembly passed a law saying online retailers do have to pay sales tax if they get online referrals, called click-throughs or affiliate programs, from local web sites. 
 
As part of the Internet Transactions Resolution Program, the state revenue department has identiified and contacted more than 350 online retailers that have such referral programs.


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NC Shafts Amazon While Giving Google Graft

On the one hand Perdue, the legislature, and NC Department of Revenue are trying to stick the sword into an untold number of North Carolina citizens who have purchased from Amazon since 2002. On the other hand we are forced to pay Google to build a facility in western North Carolina that will employ very few people but will use a tremendous amount of electricity and re-cycle zillions of gallons of water every day to keep its computer farm going. Remember the tax cut last year when Purdue furloughed state workers for two days? Purdue now proposes to pay back the state workers for their two days off. Somehow something here doesn't seem right, a little like when I tell my boss, "I'll be two hours late reporting for work tomorrow, but don't worry 'cause I'll make up my time by leaving two hours early."

NC law not applicable?

"The U.S. Supreme Court ruled nearly two decades ago that out-of-state merchants don't have to pay sales tax unless they have an office in the state. But last year the N.C. General Assembly passed a law saying online retailers do have to pay sales tax if they get online referrals, called click-throughs or affiliate programs, from local web sites. "

 Why is there a "but" between those two sentences? Those 2 ideas have nothing to do with each other, at least that's what I thought.

I personally think that law that was passed was total junk, and an attempt to get around the first law. But, that being said, Amazon said they would stop the program if the GA passed that law, and so they did. (I'm pretty sure I just read this past week in the N&O that the program is still shut down too).

All the GA managed to do was force people who had businesses running based on that program to either shutdown or move out of state. Good going guys, real smart :)

 So... the first law is still in effect, and the second law doesnt apply to Amazon anymore in NC.... As far as I can see, Amazon can and should continue to tell NC to go pound sand.

And that's a good question... If Amazon signs up for this and other "major" retailers sign up for this, that means next year on my state tax return I can put zero on that line on my return, right? Not even for the "estimated" amount that most do?

Something else to mismanage

Since they have made a mess of the school lottery, I am sure the NC tax man thinks "here's some easy money" to make up for the lottery and other assorted mismanaged programs where the money has evaporated. Do you think the tax man reports all his purchases from Amazon and others? Definitely boycotting any retail who signs up for this "illegal" agreement.

NC has proved itself many

NC has proved itself many times over to be an exceptionally poor steward of the money it gets. The state doesn't morally deserve much of what it already takes. I'll give all the business I can to Internet retailers who tell NC to go take a flying leap.

This is a blatant attempt to defy a SCOTUS ruling, and it should be legally treated as such.

This just shows that NC

This just shows that NC knows they don't have a leg to stand on. I pledge to double my purchases with any online retailer who tells NC Department of Thieves to shove it!

Fat chance I'll buy from any

Fat chance I'll buy from any online entity that does not have a bonafide business presence in NC that charges the tax and sends it back to this horribly wasteful pack of politicians.

They can kiss that business good bye and anyone dumb enough to sign the 'agreement' is a fool.

Government Greed

So, what is the difference between government greed and corporate greed? With private businesses you have a choice to choose with whom you will do business. With government, there is no choice. Taxes are the ultimate inflation tool.

online taxes

Go suck a lemon.  Cut some overhead if you can't manage a budget!  Get some money back from Easley and his cronies.

 

What about the line on the income tax form?

We end up paying the tax on out of state purchase at the end of the year on our income tax forms. Do you think after all these online retailers start charging sales tax that the amount 'estimated' you owe for out of state and online purchases is going to go down?

SCOTUS has already ruled it

SCOTUS has already ruled it UNCONSTITUTIONAL to require OUT OF STATE retailers to charge sales tax.

The retailers should tell NC to stuff it.

Broke NC desperate for tax money

Yep, your high-quality corrupt politicians in Raleigh who can't balance a budget to save their lives want a piece of that Internet action BIG TIME. Those pot-bellied Demon-crats up there in Orange County are drooling over the Benjamins as we speak. Evil incarnate, ALL OF THEM.

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About the blogger

John Murawski has been a full-time newspaper reporter since 1991, with stints at Legal Times and The Chronicle of Philanthropy (both in Washington, DC), The Philadelphia Inquirer and The Palm Beach Post (in South Florida) before arriving at the N&O in December 2004. At the N&O he covers energy (nuclear, coal, renewable, efficiency), hydraulic fracturing (or "fracking"), public utilities and health care. His beat includes PSNC Energy, Piedmont Natural Gas, Duke Energy Progress, PowerSecure International, GlaxoSmithKline, Merck, Novo Nordisk, Pfizer, Biogen Idec and others. He has also contributed more than 30 book reviews on topics spanning botany, history, science and religion. You can reach him at 919-829-8932 or e-mail him.
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