Amazon Says Data Disclosure Will Invade Privacy on 'Massive Scale'

[This posting has been updated.]

North Carolina tax collectors want to turn over the names, addresses and a full list of everything any resident of the that state bought from the online retailer in the last seven years. That's right, every book, every CD, every DVD or videotape, about 50 million items in all.

But the folks at Amazon aren't rolling over on the request; the company has sued to stop the state revenuers from gaining access to that information. "If Amazon is forced to comply with this demand, the disclosure will invade the privacy and violate the First Amendment rights of Amazon and its customers on a massive scale," the company said in its complaint.

The North Carolina tax collectors are apparently conducting a routine audit of Amazon's business. In the course of that audit, Amazon has already provided the state with lists of the items it has shipped to North Carolina, the destination zip code, and the value of the purchases, which should be enough information for the state to determine whether Amazon is complying with various state and local sales tax laws. But the Department of Revenue is not satisfied with that information and has told Amazon it plans to use an administrative summons to get the complete list.

Clearly, disclosure of such information would be a huge violation of North Carolinians' privacy, and it's certainly not a risk that Amazon users willingly took. How many of us would expect our state government to get a full list of what we're reading and watching, and having that list possibly become a public record or otherwise be revealed? It's unclear what the Department of Revenue hopes to gain by forcing Amazon to breach its users' privacy, but North Carolina residents definitely have a lot to lose.

The consequences for free speech of this administrative gambit could be huge, since a list of a person's media-buying habits can reveal all kinds of sensitive personal information. Religious affiliation, mental and physical health issues, sexual orientation, political ideology - all of this is personal information that should be an individual's choice to share or keep private, but it's also all information that could likely be gleaned from the contents of a person's Amazon shopping cart.

The chilling effect would be immediate. Wary buyers will face the choice of censoring their own access to information or disclosing their private reading to the government, or even the world. At the very least, shoppers would think twice about whether they'd want to go on official government record as having purchased "The Substance Abuse Recovery Workbook," or "Dandruff Solutions," both of which are books sold by Amazon.

If North Carolina wants to enforce its tax laws against its residents - actually demanding that residents pay tax on items they purchase, if the seller has not paid sales tax - it might be able to argue that it needs to know how much each resident spent online (though even that could be problematic). But it's absolutely inconceivable that the government should be able to learn exactly what books its citizens are reading and what movies they're watching.

While it's understandable that budget-strapped states are exploring every revenue-generating avenue available, raising money is no excuse to trample the Constitution. There are a number of proposals on the table to address this broad sales tax issue, but this approach should have been dead on arrival. Any effort to raise revenue must respect North Carolinians' privacy and First Amendment rights to read, watch, and listen to whatever they choose, without the government sticking its nose into their shopping bags and bookshelves.

UPDATE: North Carolina Secretary of Revenue Kenneth Lay has publicly denounced Amazon's filing as "misleading." In a statement released to CNet's Declan McCullagh Lay says:

"Amazon's complaint is misleading in alleging the department has required detailed information revealing personal consumer preferences, such as book titles."

However, letters from another NC tax official to Amazon, which were obtained by McCullagh, call Lay's public statement into question.