The ACLU announced today that it has reached a settlement (.pdf) with the North Carolina Department of Revenue (NCDOR) over the privacy lawsuit which will protect online customers' personal information and free speech rights.

Amazon originally filed a lawsuit to stop the NCDOR from collecting personal information about its customers for a tax audit which would have revealed what kind of books, music, and DVDs they were purchasing. The ACLU intervened in the lawsuit on behalf of several Amazon customers whose private information was at stake. A federal court in Western Washington ruled in October that government requests for detailed information about customers violate Internet users' rights to free speech, anonymity, and privacy.

According to the settlement, the NCDOR has agreed to stop asking for personally identifiable customer information combined with details about the titles purchased by them from Internet retailers. “Americans have a right to read and purchase the lawful materials of their choice without fearing that the government is looking over their shoulders," said Aden Fine, staff attorney with the ACLU Speech, Privacy, and Technology Project. "These intrusive requests were at odds with fundamental principles of our democracy, and we are glad they will come to an end.”

What is interesting is that the NCDOR has maintained from the very beginning that the case between NCDOR and Amazon "has been twisted into something it is not." "Bottom line, this is about fairly collecting the tax that is due to the state of North Carolina and nothing more," the NCDOR said in a statement, adding that the federal court had acknowledged at the time of its October ruling the department's need to gather basic information to collect taxes from Amazon.

The department has repeatedly insisted that it is not interested in the titles or similar details of things purchased by Amazon customers. "This settlement only makes our position more clear," the NCDOR said. "The lawsuit on this particular issue could have been avoided altogether if not for the aggressive stance Amazon took to avoid compliance with North Carolina’s tax laws. There would have never been an issue of customer privacy if Amazon would simply collect the North Carolina sales tax that others already do."