Louisiana vs Wal-Mart.com

Louisiana Supreme Court Finds Wal-Mart.com Does Not Have to Collect Sales Tax on Behalf of Third-Party Sellers

The U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair opened the door for states to require out-of-state sellers to collect sales tax even if they lacked a “physical presence” within that state. A majority of states have subsequently imposed such requirements. For example, as of July 1, 2020, businesses that sell their products online to customers in Louisiana must start collecting state and parish (county) sales taxes.

 

There is also the separate but related issue of “marketplace facilitators.” These are businesses that allow or facilitate third-party sales. Amazon and Wal-Mart, for example, allow third-party merchants to conduct sales through their websites. Most states included language in their post-Wayfair legislation that require these marketplace facilitators to collect and remit sales tax on behalf of third-party sellers. Louisiana’s law, however, did not include such language.

Despite this, Louisiana’s Jefferson Parish attempted to force Wal-Mart.com to remit taxes on third-party sales made through the site between 2009 and 2015. The parish’s sheriff, who also serves as its tax collector, argued that under pre-Wayfair law, Wal-Mart.com was properly classified as a “dealer” required to collect tax. On this basis, the sheriff sought a court order directing Wal-Mart.com to pay nearly $1.9 million in back sales taxes.

 

 

Although two lower courts ruled in favor of Jefferson Parish, a divided Louisiana Supreme Court agreed with Wal-Mart.com that it was not a dealer for purposes of sales tax collection. Justice John L. Weimer, writing for a 4-3 majority, said the legislature broadly defined “dealer” in the pre-Internet age to include out-of-state businesses that primarily sold goods through a mail-order catalogue. The key, however, was that these dealers actually owned the goods they were selling. In contrast, Weimer said there was no evidence the legislature ever intended dealer to cover “intermediaries that are only tangentially involved in sales transaction, such as a marketplace facilitator relative to sales by third party retailers.”

Court Points to Special Exception for Auctioneers as Proof Marketplace Facilitators Are Not “Dealers”

 

Weimer compared marketplace facilitators like Wal-Mart.com to auctioneers. It was generally accepted in Louisiana that auctioneers did not have to collect sales tax on goods sold at auction. The legislature therefore adopted special legislation requiring auctioneers to register as “dealers” and start collecting sales tax. The need for such legislation at all meant that third-party facilitators are presumably not “dealers,” Weimer noted. Indeed, to assume that facilitators were dealers, as Jefferson Parish urged, would mean that “any intermediary that aids or enables sellers to reach new customers although not selling anything” directly could be held responsible for collecting sales tax. Weimer said that would be an “absurd result.”

 

In a dissenting opinion, Chief Justice Bernette Joshua Johnson said she would hold that Wal-Mart.com “is responsible for collecting and remitting the taxes from sales of third party retailer items on its online Marketplace.” As the chief justice saw the case, Wal-Mart.com was not a “hands-off bystander” to these transactions. To the contrary, she noted that Wal-Mart.com “has sole control over the website as well as sole control of marketing of products.” More importantly, it owned the actual transaction information–the customer’s credit card information. Johnson said she was also troubled that the terms of Wal-Mart.com’s marketplace retailer agreements “effectively disallows collection of sales taxes by remote sellers.”

Louisiana Legislators May Moot Long-Term Impact of Court’s Ruling

 

In the end, the Supreme Court’s decision may only give Wal-Mart.com and other marketplace facilitators a brief reprieve. Two bills are currently pending before the state legislature that would bring Louisiana in line with the majority of states that now require marketplace facilitators to collect and remit sales tax on behalf of third-party sellers. One of the bills, SB 138 expressly states a marketplace facilitator must collect tax even if it is not a dealer. However, the bill would only apply to marketplace facilitators that derive more than $100,000 in gross sales or complete at least 200 transactions in Louisiana annually.

 

Sales tax change frequency by state

Zip2Tax compares the sales tax change frequency of the states. Ever wonder how your state measures up?

It’s generally accepted that there are around 11,000 sales tax jurisdictions across this great and diverse country of ours. This fact alone would seem to be a fairly reasonable argument for the outsourcing of sales and use tax rates from a company such as Zip2Tax. As the head of marketing for Zip2Tax I am always trying to understand our customer’s needs better. I found myself wondering about the sales tax change frequency for all these jurisdictions. I mean, 11,000 rows in a document might be manageable if they only changed their rates every few years or so, right?

So I sat down and with my trusty Excel spread sheet and a large cup of strong coffee and started going back through our research documentation counting the number of months that there had been any sales tax changes in each state. I wanted to determine which states had the highest sales tax change frequency. I sampled a three-year period from December 2015 going back through January 2013.

… fully one-third of the time that these states CAN make sales or use tax rate changes, they DO.

When the numbers were crunched I had some surprises in store, to be sure. For one, the states that provide Zip2Tax with the most new customers have no obvious correlation with which states had the highest sales tax change frequency. In fact, California and New York were only slightly above average.

The standout in this sample was Alabama which turned out to be far and away the leader with changes in 30 out of the 36 months – that’s 83% of the time. This also helped to dash my hopes of discovering a hotbed of customer need for our product since Alabama has so far not proven to be a great source of new business.
sales tax change frequency

Arizona came in second with 14 changes over that same period. Georgia, Louisiana, Oklahoma and Texas all tie for third place with 13 sales tax rate changes over 36 months. That translates to mean that fully one-third of the time that these states CAN make sales or use tax rate changes, they DO. Not to overstate the obvious, but that is more frequently than quarterly updates.

… more than two-thirds, updated that tax a minimum of once a year, and by the end of 3 years, 86% of the states had made changes…

In fact, 68% of the states that collect a sales tax, that’s more than two-thirds, updated that tax a minimum of once a year, and by the end of 3 years, 86% of the states had made changes.

So as I drained the last of my cold coffee I felt some gratification in that even though sales tax will remain an extremely complex moving target in nearly all 50 states, at least it should mean a steady supply of customers for sales tax rate providers like Zip2Tax for the foreseeable future.

Fill in the sign up form below this blog to receive our monthly newsletter and get alerted when one of these states makes a sales or use tax change or other important tax-related information.

 

New Year’s sales tax updates effective January 1, 2016

Sales tax updates: 19 states have sales and use tax rates which have changed in Zip2Tax products since December 2015. 

There are sales tax updates in Alabama, Arkansas, Arizona, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Minnesota, Missouri, North Dakota, New Mexico, Nevada, Ohio, Oklahoma, South Dakota, Texas and Utah effective Jan. 1st.

In Alabama, tax rates changed for Rockford, Luverne and Waterloo.

In Arkansas, tax rates changed for Bald Knob, Brinkley, Gillham, Harrisburg, Viola and Crittenden County.

In Arizona, tax rates changed for Apache Junction, Phoenix and Prescott Valley.

In Colorado, tax rates changed for Bayfield, Bennett, Fraser, Lyons, Ouray, the Counties of Alamosa and Chaffee, Gunnison Valley RTA, Montezuma County Hospital District, Colorado Springs, Crested Butte and Greeley.

In Florida, tax rates changed for the Counties of Jackson, Walton, Hernando and Saint Johns.

In Georgia, tax rates changed for Hancock County.

In Illinois, tax rates changed for Morton Grove, Posen, Stickney, Bellwood, Bloomington, Herrin, Hopkins Park, Matteson, Shorewood and Cook County.

In Kansas, tax rates changed for Shawnee.

In Louisiana, tax rates changed for Folsom, Lake Charles and Merryville.

In Minnesota, tax rates changed for Rochester and the Counties of Otter Tail and Freeborn.

In Missouri, tax rates changed for Carthage, New Madrid County, Chillicothe, Holt County, Saline County and Aurora.

In North Dakota, tax rates changed for Alexander and Center.

In New Mexico, tax rates changed for Maxwell, Springer, De Baca County, Eddy County, Vaughn, Lincoln County, Mora County, Otero County, Jemez Springs, Farmington and Kirtland.

In Nevada, tax rates changed for Clark County.

In Ohio, tax rates changed for Portage County.

In Oklahoma, tax rates changed for Bartlesville, Gore, Hollis, Norman, Del City, Marshall County and Pittsburg County.

In South Dakota, tax rates changed for Astoria.

In Texas, tax rates changed for Corral City and Goliad.

In Utah, tax rates changed for Dutch John.

There were 13 states with ZIP code changes effective after December 2015 including California, Connecticut, Florida, Iowa, Indiana, Massachusetts, Michigan, Missouri, Montana, New Jersey, Oklahoma, Texas and West Virginia. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For December 2015 changes click here.  To see what States are the most guilty of constantly changing their tax rates visit this article.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

Sales taxes changed in four states for December 2015

Sales taxes changed in Zip2Tax products for four states since November

In Alabama, tax rates changed for Randolph County.

In Colorado, tax rates changed for Winter Park.

In Louisiana, tax rates changed for Lafayette Parish.

In New York, tax rates changed for Chautauqua County and Jefferson County.

There were 10 states with ZIP code changes effective after November 2015 including the District of Columbia, Florida, Georgia, Indiana, Massachusetts, Minnesota, Mississippi, New Jersey, Ohio and Texas. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For November’s changes click here.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

Sales and use tax changes for October 2015

Sales and use tax changes for October 2015

Sales and use tax rates have changed in 16 states in Zip2Tax products since September 2015.

In Alaska, tax rates changed for Sitka, Skagway, Seldovia and Whittier.

In Alabama, tax rates changed for Tallapoosa County, Grove Hill, Fayette, Evergreen and Dodge City.

In Arkansas, tax rates changed for Brinkley, El Dorado, and Western Grove.

In California, tax rates changed for Greenbrae and Monterey.

In Kansas, tax rates changed for Andover, Belleville, Buhler, Cherryvale, Eudora, Haven, LaCrosse, Lecompton, Meriden and Bourbon County.

In Louisiana, tax rates changed for Folsom.

In Minnesota, tax rates changed for Lyon and Scott Counties.

In Missouri, tax rates changed for Dent County, Salem, Henry County, Laclede County, New Madrid County, Sedalia, Bertrand, Bethany, Concordia, Country Club Hills, Crystal City, Fair Play, Galena, Hazelwood, Kirkwood, Miner, Rolla, St. John, Stanberry and Tipton.

In North Dakota, tax rates changed for Mandan.

In Nebraska, tax rates changed for Lincoln and Chadron.

In Ohio, tax rates changed for Lake County.

In Texas, tax rates changed for Stowell, Winnie, Rocksprings, Ropesville, Stratford, Gustine, Combes, Deer Park, Granger, Lake Dallas, Panhandle, Santa Rosa, Sonora, Southlake, White Deer and Yorktown.

In Utah, tax rates changed for Murray and Logan.

In Vermont, tax rates changed for Colchester.

In Washington, tax rates changed for Tumwater TBD.

In Wyoming, tax rates changed for Weston County.

There were 25 states with ZIP code changes effective after September 2015 including Alaska, Arizona, Colorado, DC, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Missouri, North Dakota, Nebraska, New Jersey, Nevada, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Virginia and West Virginia.A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For September’s changes click here.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

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