Amazon Will Collect North Carolina Sales Tax on February 1, 2014

Amazon will begin collect sales tax in North Carolina on February 1, 2014. The company’s motivation for doing so is unclear; according to wsoctv.com, the Amazon spokesman who confirmed the news “would not confirm the reason for the changes.”

And a stunning change it is.

In 2009, North Carolina passed an affiliate nexus law making “Amazon responsible for collecting sales taxes because it had a network of local affiliates—North Carolina residents who linked to products on their blogs, promote Web shopping deals and offer coupons” (Huffington Post).

Before the law took effect, Amazon severed its relationship with its North Carolina affiliates. Amazon’s Associate Program Operating Agreement explains the company’s policy toward North Carolina and other states with affiliate nexus laws:

“…if at any time following your enrollment in the Program you become a resident of Arkansas, Colorado, Maine, Minnesota, Missouri, North Carolina, or Rhode Island, you will become ineligible to participate in the Program, and this Operating Agreement will automatically terminate, on the date you establish residency in that state.” (Emphasis mine).

The situation between state and seller became even more heated in 2010, when Amazon filed suit against the North Carolina Department of Revenue for requiring the company to provide “information on people who bought about 50 million items since 2003.” The court eventually ruled against NC and the state settled with Amazon.

After losing to Amazon in court, then Revenue Secretary David Hoyle “vowed…to collect sales tax on purchases North Carolina residents made from online retailers.” On February 1, 2014, his wish will come true—at least with respect to the largest online retailer in the world.

North Carolina will become the 20th state in which Amazon.com collects sales tax.

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photo credit: Robert Scoble via photopin cc