5th Circuit Brief: Louisiana’s Sales Tax System is Unconstitutionally Complex

Halstead Bead’s attorneys today filed a reply brief in the U.S. Court of Appeals for the Fifth Circuit, part of its legal challenge to Louisiana forcing out-of-state small businesses to comply with a nebulous and arbitrary local tax system. Halstead Bead, a family-owned jewelry and craft supply business in Prescott, Arizona, is suing the state of Louisiana to seek relief from these onerous burdens for small businesses everywhere. 

“Halstead’s challenge should be allowed to proceed in federal court,” the brief filed today states. It goes on:

The extensive merits arguments between the parties shows this Court two important issues. First, there is extensive disagreement about the burdens Louisiana places on interstate commerce—which means trial in the District Court is essential. Second, the merits arguments highlight this is not about stopping tax collection, but enabling remote sellers the chance to remit taxes in the way the Supreme Court prescribed in South Dakota v. Wayfair…The [Tax Injunction Act] and comity do not apply when a challenge is how to pay, not how much and the state provides no place to bring these claims.

In the litigation, Louisiana has argued that their tax rules are not complex, and that they have provided sales tax rate lookup tools for compliance with tax nexus issues. Halstead Bead disputes this claim, however, as none of these tools are official, and that the only way to stay up to date with updates to the tax system is for sellers to call the local parishes, one by one.

“It is not unusual that the parties in this case dispute the facts, especially in a case that involves questions of constitutional rights,” said the National Taxpayers Union Foundation’s Joe Bishop-Henchman.“But because Halstead Bead is not suing for refund, the state courts and Board of Tax Appeals are closed to them, and federal courts are the only option to protect their important constitutional rights. The state and parishes’ arguments that this is not a case for federal courts simply doesn’t hold water.”

Halstead Bead is being represented by a team of attorneys from the Pelican Institute for Public Policy, the Goldwater Institute, and the National Taxpayers Union Foundation’s Taxpayer Defense Center.

If you would like to speak with NTUF’s Executive Vice President Joe Bishop-Henchman about the Halstead Bead case, please contact NTUF Vice President of Communications Kevin Glass at 703-299-8670 or at kglass@ntu.org.