North Carolina is demanding that the online retailer provide records on what was purchased by consumers in the state since 2003. That amounts to over 50 million purchases, no small number. While North Carolina law requires consumers to pay taxes for online purchases if buying the same item in a store would result in a sales tax, out-of-state retailers–like Amazon–can’t be forced to collect North Carolina’s tax if it has no physical presence in the state. Hence, the demand for all information on purchases since 2003.
Amazon pursues summary judgment as to its First Amendment claim that the DOR’s request for all information related to Amazon’s sales to North Carolina residents violates the First Amendment. The Court agrees and GRANTS the motion.
The First Amendment protects a buyer from having the expressive content of her purchase of books, music, and audiovisual materials disclosed to the government. Citizens are entitled to receive information and ideas through books, films, and other expressive materials anonymously. In the context of distribution of handbills, the Supreme Court held that anonymity “exemplifies the purpose behind the Bill of Rights, and of the First Amendment in particular.” McIntyre v. Ohio Elections Comm’n, 514 U.S. 334, 357 (1995); Talley v. California, 362 U.S. 60, 64 (1960) (protecting anonymity in handing out campaign literature). The fear of government tracking and censoring one’s reading, listening, and viewing choices chills the exercise of First Amendment rights. In a concurring opinion, Justice Douglas highlighted the deleterious effect of governmental meddling in the reading habits of its citizens: “Some will fear to read what is unpopular what the powers-that-be dislike. When the light of publicity may reach any student, any teacher, inquiry will be discouraged.” United States v. Rumely, 345 U.S. 41, 57–58 (1953) (Douglas, J., concurring).
In other words, the First Amendment protects a buyer’s right to express herself in what they purchase, and that right includes the right to anonymity. Later in the opinion, the justice notes that disclosure of purchasing habits could result in a chilling effect on the willingness of individuals to make purchases online. Ironically, the North Carolina Department of Revenue, the actual party seeking the records, admitted that they “no legitimate need or use for having details as to North Carolina Amazon customers’ literary, music, and film purchases[,]” yet still would not give up the request for that information. Therefore,
With no compelling need for both sets of information, the DOR’s request runs afoul of the First Amendment. It bears noting, too, that the DOR’s requests for information were made solely in the context of calculating Amazon’s potential tax liability. Amazon has provided all of the data necessary to determine its tax liability, except any potential tax exemptions. The DOR has failed to articulate the compelling need to calculate these possible exemptions, particularly where it has admitted that it can and will assess Amazon at the highest rate and it would permit Amazon to “challenge the assessment and … establish that exemptions or lower tax rates applied to some products.” Even assuming there is a compelling need to calculate Amazon’s tax liability inclusive of exemptions, the DOR’s requests are not the least restrictive means to obtain the information. The request is overbroad. The Court GRANTS the motion for summary judgment.
With no real need for the information, why the broad request? Why require information that is clearly personal and expressive and has no bearing on the ability to collect taxes? If there were ever a case that demonstrates the insensitivity of government bureaucrats, this is it. Ironically, it took a large corporation–Amazon–to stand up to them and tell North Carolina ”no, we won’t divulge that information.” What if it had been a smaller company, one that could not afford the costs of litigation? Would North Carolina have succeeded? Or have they already before in the past?
- North Carolina Department of Revenue’s Demand for Amazon Customer Records Violates the First Amendment (volokh.com)
- Federal Judge Quashes N.C. Search For Amazon Customer Data (blogs.forbes.com)
- Federal Judge Stops NC’s Privacy Invasion (marketingpilgrim.com)
- Judge: Free speech protects Amazon buyers’ data (sfgate.com)