Online retail giant Amazon recently won an important federal court victory over the North Carolina Department of Revenue that could have indirect implications for the state’s ticket resale laws that require ticket resellers to file tax reports with the department for the payment of a 3 percent tax on ticket sales.
Amazon and the North Carolina Department of revenue are not involved in a ticketing dispute; instead, the two are currently involved in a legal case surrounding the collection of state taxes on purchases on the site by North Carolina residents, which Amazon is not collecting. The fight is similar to one that StubHub is involved in with the City of Chicago over the payment of the city’s amusement tax.
As part of the case, the Department of Revenue was seeking broad information on purchases on Amazon by residents of the state to help build its case that the online retailer should be collecting sales tax. From August 2003 through February 2010, the period in question in the legal case, Amazon conducted nearly 50 million transactions with North Carolina residents, according to the U.S. District Court in Seattle.
The department’s requests for information culminated in the spring of this year with a request for names and addresses of North Carolina residents who made purchases on the site — prior to that, the department had asked for purchasing information that did not include names and addresses. North Carolina charges a 5.25 percent tax on most retail purchases, and most of the state’s counties also levy an additional 2.5 percent tax on top of that.
Late last month, Amazon won a summary judgment that said the company did not have to turn over the names and addresses because it would violate purchasers First Amendment rights, though the company has turned over other forms of purchase information. By linking merchandise sales with names, the state would have known who bought what in the state, though officials said they were not seeking to find out the intricacies of such purchases, just the amounts for tax purposes. Whether Amazon will be liable for paying the tax is still pending.
The state requires ticket resellers to provide periodic purchasing information to the department, as a condition of being allowed to resell tickets in the state, and those resellers are supposed to pay the state a 3 percent tax on those sales.
But, now if disputed, those resellers may not have to provide names and addresses for ticket purchasers, as a result of the Amazon case.
Chicago attorney John Moore, who has represented ticket brokers, told TicketNews that the ruling could be good news for resellers, because if Amazon had lost, it may have been forced to “disclose the reading/viewing habits of Amazon’s customers.”
“Clearly, collecting customer names with event [information] for tax purposes would present similar questions,” Moore said, adding that the court found that such disclosures would be “in violation of the First Amendment.”
