Those of you who follow tax issues are familiar with the Commerce Clause.  It’s essentially a statement that indicates that no State shall force any out of state retailer from collecting sales tax on it’s behalf UNLESS that out of state company has a physical property (definition of “physical property” has been debated…) within it’s borders.

For example, a Rochester, NY based catalog company or e-tailer cannot be forced to collect Colorado sales tax on orders made by Colorado citizens.  Unless, of course, that Rochester, NY company hires a sales person IN Colorado, or builds a warehouse or distribution center there.

Now, the key consideration here is the “collection of sales tax.”  No retailer can be MADE to COLLECT the sales tax.

As we also know, due to rising costs (both just and unjust, good spending and bad spending, etc), many States are feeling a new level of financial hardship.  It’s likely, and in fact expected, that they will scrape to collect every penny they can from resident citizens and corporations.

So two States have stepped to the plate to raise the bar on SKIRTING the Constitution, most particularly in this case, the Commerce Clause.

North Carolina and Amazon.com:  Bad Blood, Bad Policy

Source: http://news.cnet.com/8301-13578_3-20002870-38.html

North Carolina has issued a subpoena requesting seven years of North Carolina resident purchase history from Amazon.com.  The idea then is that they can pursue Sales and Use Tax.  It would also provide some relatively sensitive purchase information to the North Carolina Tax folks, which is also protected somewhat under the Constitution.  Book purchases and movie/media purchases are supposed to remain anonymous, and away from the prying eyes of the government.

Amazon has sued in Seattle to stop this action, and the outcome is pending.

Colorado:  Just a Brief Reminder if you Could….

Colorado, in the mean time, has given catalogers and retailers two choices:  Collect sales tax on purchases made by our residents (voluntarily, of course), or send them each a letter every year itemizing how much they owe to Colorado in Sales and Use tax.

This is one step short of subpoenaing the information themselves, but it serves the same purpose.

Conclusion

In conclusion I’d simply state that States will continue to find ways to fill their coffers.  Primarily, since those coffers are empty in record proportions.

How do you feel about these developments?  Are they Constitutional?  Will other “tax adventurous” States follow along soon?