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Originally Posted by QuikSand
Well, the law here does make a meaningful distinction between two things:
-an obligation of a seller to collect sales tax
-an obligation of the buyer to pay a companion use tax
Your argument above about nexus generally follows the case law with regards to the first of the above... that historically the state needs to have nexus to require the vendor to collect. However, states have had use taxes for decades, without any meaningful challenge to their constitutionality. Not to say it's impossible that they one day get struck down, but it doesn't seem likely -- basically the courts have said that the states have the power to levy a tax on something brought into the state for its final use. And that applies to a company buying a freight train full of pig iron, right on down to me buying taxable items from an online vendor.
The article above does a better than average job of laying out the issue, but the more recent wrinkle in this is that states are asserting that companies like Amazon actually now do have a nexus in their state, by virtue of having a relationship with other companies who physically locate there. So, I am guessing that what NC is essentially saying in its laws is not that they want to require Amazon to withhold taxes even without nexus, but rather that their affiliate relationship with NC businesses create sufficient nexus for them to at least disclose, if not collect and remit. This argument is pretty unsettled, by pretty much everyone's accounting. As our Empire State friend above noted, I believe NY was the first to try this approach.
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Yeah, but as I recall, didn't Amazon disassociate themselves with their New York-located vendors after that happened?
I mean, it seems like the net outcome here isn't going to be Amazon going "Gosh, you got us. Sorry, guys," but one of the largest internet presences ceasing affiliate relationships with vendors located in North Carolina, which, presumptively, would hurt North Carolina's income tax receipts, since those vendors would then be doing less business.
I'm not trying to suggest that North Carolina doesn't have a leg to stand on here - only that continuing to pursue Amazon in an effort to recover sales tax or to gain information about the end users to try to collect the use tax from them is, ultimately, not going to be a beneficial scenario for the state. Short-term gain, possibly, but long-term loss, almost certainly.