Evan Schuman's StorefrontBacktalk

A huge number of U.S. states have been trying to see how far—and how creatively—they can push E-Commerce to boost state tax revenue, including California and Colorado. The biggest complaint from retailers is that the state E-Commerce tax rules are inconsistent, changing constantly and, by the way, are quite possibly illegal.

But it’s not only states that are pushing back against major e-tailers. Many of the largest physical retailers resent that they have to pay state taxes and yet their virtual rivals don’t. Sears, for example, has been among the most vocal. And even Amazon itself has been scared away from some business areas partially because of the tax debate, such as its intent to sell wine. Bookseller Borders even cited state tax issues as one of the key reasons it severed its multi-year relationship with Amazon and launched its own E-Commerce site.

Amazon’s filing made the clean argument that it has been cooperative thus far.

North Carolina “is auditing Amazon’s compliance with state sales and use tax laws. To date, Amazon has cooperated fully with the audit, providing [North Carolina] with voluminous information about its sales to North Carolina, including, for each transaction: the order ID number; the city, county and Zip code to which the item was shipped; the total price for the transaction; the date of the transaction; and Amazon’s standard product code for each item (known as the Amazon Standard Identification Number or ASIN),” Amazon’s filing said. “With these product codes, [North Carolina] is able to immediately find on Amazon’s Web site the full description of every product purchased by Amazon’s North Carolina customers since 2003—nearly 50 million items in all.”

Amazon added a really nice touch by trying to convince some of North Carolina’s more powerful residents—celebrities and politicians—that it’s in their interest to help out Amazon. Yes, a little implied threat never hurts.

“The identities and expressive choices of these customers have become subject to government scrutiny only because those products were purchased from an out-of-state retailer. [North Carolina’s] actions threaten to chill the exercise of customers’ expressive choices and to cause Amazon customers not to purchase certain books, music, movies or other expressive material from Amazon that they might otherwise purchase if they did not fear disclosure of those choices to the government,” Amazon wrote, and then it moved into the threat: “This privacy concern is even greater for public figures who have purchased items from Amazon, because their purchase histories may generate significant political or press interest or otherwise be made public.”

A little Marlon Brando from his Godfather character: “It would be so unfortunate were anything to accidentally happen to those records. In the To field of an E-mail, sending to ‘A federal judge’ might sometimes be auto-filled as ‘Associated Press.’ That Outlook auto-complete can be stupendously dangerous. I’d hate for that to inadvertently happen.”

In case the earlier suggestion was too subtle, Amazon’s filing gets very specific about what constitutes embarrassing titles. Among the books Amazon’s North Carolina customers purchased, according to the filing, are:

• He Had It Coming: How to Outsmart Your Husband and Win Your Divorce, by Stacy Schneider
• Outing Yourself: How to Come Out as Lesbian or Gay to Your Family, Friends, and Coworkers, by Michelangelo Signorile

Some of the movies Amazon’s North Carolina customers have purchased include:

• Lolita (1962) (DVD) (ASIN B000UJ48VI)
• Brokeback Mountain (2005) (DVD) (ASIN B00005JOFQ)
• Fahrenheit 9/11 (2004) (DVD)

“Other Amazon customers have purchased potentially controversial music, including recordings by Eminem such as The Marshall Mathers LP (ASIN B00004T9UF) and The Slim Shady LP (ASIN B00000I5JQ).” Hmmmm. We guess these are titles Amazon considers embarrassing.

Amazon makes its case directly and then repeats the threat to politicians: “These and other books, movies and music could be considered sensitive, personal, controversial or unpopular. Each order of a book, movie, CD or other expressive work potentially reveals an intimate fact about an Amazon customer. Public figures who have purchased expressive works and other items from Amazon have the additional concern that their purchase histories will be scrutinized and used for political purposes, appear in the press or otherwise be made public.”