Here is an excerpt editorial from the New York Times regarding Amazon’s legal battle with the noncollection of sales taxes:
A 1992 Supreme Court ruling holds that a retailer must collect sales tax only if it has a physical presence in the customer’s state. So a bricks-and-mortar retailer that also operates online, like Target or Macy’s, will collect sales taxes. Similarly, if you go through Amazon.com to buy something from, say, Target, Amazon will collect taxes from you on Target’s behalf. But Amazon and some other purely online retailers do not generally collect taxes on their own sales.
That tax is legally due, but if online retailers don’t collect it, it’s up to the individual buyer to voluntarily pay the tax, which rarely happens and is very difficult for states to enforce.
Enter North Carolina. Unable to get Amazon.com to collect the taxes, the state recently began an audit of online businesses, trying to track down what it assumes are millions of dollars in uncollected taxes. The state has told Amazon that it wants buyers’ names and the amounts they spent. That state also needs to know the general categories of spending, like books or movies or food, because some items are tax exempt. Amazon has refused to comply, claiming in federal court that North Carolina may be able to learn the titles of books and movies that its customers have bought, imperiling privacy and free speech. North Carolina officials have said they are not seeking those details. Now it is up to the court to decide whether Amazon will have to reveal the names of customers, without titles.