By Jason DeCuir
On January 29, 2020, the Louisiana Supreme Court (“Court”) released its opinion in Normand v. Wal-Mart.com USA LLC No. 2019-C-00263.1 In a 4-3 decision, the Court reversed both lower-court rulings and held that Wal-Mart.com and its online marketplace is not a “dealer” obligated to collect and remit sales tax on sales made by third-party retailers through its website.
Taking a position contrary to that of the Louisiana Department of Revenue and the 63 other parishes in the state, the Jefferson Parish Tax Collector alleged that Wal-Mart.com, as a marketplace facilitator, was a “dealer” under La. R.S. 47:301(4)(l) and therefore responsible for collecting and remitting local sales tax on all Jefferson Parish sales made through its website, including those made by third-party retailers.
According to the Court, “there is no indication the legislature intended to tax intermediaries that are only tangentially involved in sales transaction, such as a marketplace facilitator relative to sales by third-party retailers.”2 The Court reasoned that if an intermediary transmits funds to a seller, that fact does not relieve the seller of tax collection obligations nor does it cause the intermediary to assume the seller’s obligation to collect taxes.3
The court went on to state that “[t]he statutory and regulatory scheme does not contemplate the existence of more than one dealer that would be obligated to collect sales tax from the purchaser. An online marketplace in its role as a facilitator for sales of third-party retailers does not fall into these groups.”
The Court likened Wal-Mart.com and its online marketplace to that of third-party auctioneers who are expressly required under Louisiana law to collect and remit all state and local taxes.4 The Court reasoned that if an auctioneer was considered a dealer, there would be no need for a separate statutory provision governing the auctioneers’ obligation to collect taxes.5 According to the Court, legislation is likewise needed to address the obligation of online marketplace facilitators and whether or not they should collect state and local sales tax.6
Although the Louisiana Legislature has enacted collections requirements for remote sellers, legislation imposing the same on marketplace facilitators has yet to be passed. There were two such bills introduced during the 2019 Regular Session; however, neither were ultimately successful. While it is expected that legislators will re-introduce similar legislation again in the future, the 2020 Regular Session is limited to non-fiscal matters. It is not clear whether marketplace facilitator legislation would be germane in 2020, but it is likely that such legislation will be filed.
Given that neither the Louisiana Department of Revenue nor any of the other 63 parishes have previously attempted to impose a collection obligation on marketplace facilitators, this attempt by Jefferson Parish further highlights the ongoing difficulties taxpayers face with the complicated and disjointed tax system in Louisiana. As state legislators continue to entertain the idea of moving from the historical home-rule structure to a centralized state and local sales tax collection system, this case serves as yet another reminder of how timely such a move would be.
Ryan’s Louisiana Advocacy team will be tracking all tax-related bills once the 2020 Regular Session commences on March 9, 2020.
For up-to-date information on all things sales tax in Louisiana, as well as other states, please refer to Ryan News & Insights.
1 Normand v. Wal-Mart.com USA LLC, No. 2019-C-00263 (La. 1/29/20) (http://www.lasc.org/opinions/2020/19-0263.C.OPN.pdf).
2 Id. at 20.
3 Id. at 25.
4 Id. at 23.
5 Id. at 24.
6 Id. at 24
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