Note: this has been updated to reflect Gov. Edwards signing HB 558, which occurred after publication.
Louisiana Governor John Bel Edwards signed into law HB 171 (Act 15) and HB 558 (Act 375), reforms to the state’s remote-sales tax system that will greatly expand Louisianans’ ability to participate in interstate commerce. While this legislation could go further, it is nonetheless a win for taxpayers and small businesses everywhere.
Taxpayer advocates and small business owners have been lobbying for changes to the state’s sales tax structure for a long time. A lawsuit brought against the state of Louisiana by small business Halstead Bead Inc. - represented by a coalition of the National Taxpayers Union Foundation, the Pelican Institute, and the Goldwater Institute - argued that the state’s remote-sales tax structure was so restrictive and complex as to be unconstitutional. The case has been moving through the court system, and was most recently heard before the U.S. Court of Appeals for the Fifth Circuit Court last month. The reforms undertaken in HB 171 (Act 15) in response to the Halstead Bead case and other forms of activist pressure are to be applauded.
Louisiana has had one of the most restrictive and complex remote-sales tax systems in the country, mandating that any company that conducts more than 200 transactions or $100,000 of business into the state comply with its labyrinthine and archaic parish-based tax collection structure. HB 171 (Act 15) repeals the 200-transaction threshold, leaving in place only the $100,000 threshold. Halstead Bead had turned off sales to Louisiana as it neared the 200-transaction level, but has not neared the $100,000-level. HB 558 (Act 375) directs the Louisiana Uniform Local Sales Tax Board to implement a single remittance system whereby each taxpayer can remit state and local sales and use taxes through a single transaction. This new law also provides an absolute defense against any taxing authority that fails or refuses to provide timely notice to any changes in tax rates, boundaries, or exemptions to the uniform system, and it adds authority to impose a fee on any non-participating local sales tax collector to cover the costs of maintaining and operating a uniform electronic local returns and remittance system.
“Having worked with legislators on HB 171, HB 558 and other bills, and represented Halstead Bead in their suit against Louisiana, we’re thrilled we can chalk up a victory for small businesses and taxpayers,” said NTUF Executive Vice President Joe Bishop-Henchman. “There’s more to do to make Louisiana’s remote-sales tax system work for everyone, but we applaud the Louisiana statehouse and Gov. Edwards for taking this positive step forward.”
In court, the representatives for Halstead Bead have filed letters with the Fifth Circuit to notify them of the laws’ passage and indicate that it moots the litigation in Halstead Bead v. Lewis. The 200 transaction threshold is one of the most restrictive in the nation and one of the provisions most clearly contradictory to the standards set out by the Supreme Court’s remote-sales decision in Wayfair v. South Dakota. While the battle for a fair remote-sales tax system will continue in other cases, Louisiana’s tax system will now be demonstrably better.
For more information on Louisiana’s remote-seller tax structure or the Halstead Bead case, please contact NTUF Vice President of Communications Kevin Glass at 703-299-8670 or at kglass@ntu.org.