Oral arguments in Halstead Bead v. Lewis were heard today in the Fifth Circuit Court of Appeals, with Halstead Bead’s legal team presenting the case that Louisiana’s remote-seller tax system imposes nebulous and arbitrary burdens on out-of-state small businesses. This landmark case is one of the first tests of how remote-seller online sales tax is administered in a post-Wayfair world.
The Eastern District Court of Louisiana had dismissed Halstead’s case on the grounds of the Tax Injunction Act. Halstead is arguing that dismissal was wrong, and the Tax Injunction Act should not prevent Halstead from seeking remedy. For more information on the merits of the case and how it has progressed through the courts, visit ntu.org/halstead.
"The judges were engaged, had read the briefs, and ready to wrestle with these issues,” said National Taxpayers Union Foundation Senior Attorney Tyler Martinez, who argued the case in the Fifth Circuit Court of Appeals. “We're arguing that the Tax Injunction Act does not apply in this case, and the court was interested in seeing how far this case can go."
Halstead is represented by a team from NTUF, the Pelican Institute, and the Goldwater Institute in this landmark case. Should the Fifth Circuit rule in favor of Halstead, the case will be able to be argued on the merits in state court.
"This is an important case. It's the first - to my knowledge - to ask if the Supreme Court was serious in South Dakota v. Wayfair. Were they serious about having important guardrails to protect interstate commerce and the due process rights of out-of-state sellers?" Martinez said. "The courts need to hear this. Since Louisiana has closed its courthouse doors to Halstead, there's nowhere else to go except federal court."
The Halstead team is confident that they are in the right on the merits and that the Tax Injunction Act should not be so narrowly read.
"At the end of the day, this argument was about whether Halstead gets its day in court, and its chance to prove how burdensome Louisiana's tax system is,” Martinez said.
For more information on the Halstead case and what it means for interstate commerce and sales tax policy, please contact NTUF Vice President of Communications Kevin Glass at 703-299-8670 or at kglass@ntu.org.
