Retailers Score Win at Louisiana Supreme Court

Local tax law cannot be expanded to rope in new taxpayers

By [ Kathleen McGuigan ]
Washington, DC
02/03/2020

The Louisiana Supreme Court ruled Wednesday that a local tax parish cannot rely on the landmark South Dakota v. Wayfair U.S. Supreme Court decision to unilaterally expand the state’s sales tax law to rope in new taxpayers.

“This is an important victory for retailers,” said Kathleen McGuigan, Executive Vice President and Deputy General Counsel at the Retail Industry Leaders Association. “The decision makes it clear that local tax authorities cannot stretch existing state tax law to collect sales tax on goods sold by third parties on a company’s online marketplace. It is the role and responsibility for the state legislature and not local tax authorities to change state sales tax law.”

The 2018 U.S. Supreme Court Wayfair decision paved the way for states to collect sales tax from online sellers effectively creating a level playing field for all retailers. Importantly, this decision does not automatically change existing state laws, but instead overturned outdated U.S. Supreme Court precedent that made it unlawful for states to collect sales taxes from online only merchants. The Wayfair decision paved the way for states to amend their current tax laws in order to require online sellers to collect and remit sales taxes that consumers owe.

The Retail Litigation Center, the National Retail Federation and Louisiana Retailers Association filed an amicus brief in this case urging the state’s highest court to interpret the Wayfair decision properly.

“We hope this decision will compel the Louisiana state legislature to amend its state sales tax law to cover sales made on online marketplaces,” said McGuigan.

“Issues surrounding online sales tax collection are complicated and should be left to state legislatures that have carefully studied how to do this rather than local governments,” National Retail Federation Vice President and Tax Counsel Rachelle Bernstein said. “We are glad that the Louisiana Supreme Court agrees. Allowing local governments to set these rules could lead to a patchwork of standards that would undermine the progress that has been made in leveling the playing field between local stores and online sellers.”

The case is Parish of Jefferson v. Walmart.com USA LLC, case number 2019-C-263, in the Louisiana Supreme Court.

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Directed by the chief legal officers of the country's leading retail companies, the Retail Litigation Center (RLC) is the only organization dedicated to advocating for the industry's top priorities in the federal and state judiciary. The RLC also works with leading law firms and retail corporate counsel to develop forward-thinking strategies to combat meritless mass action litigation. Founded by the Retail Industry Leaders Association (RILA) in 2010 as an independent organization, the RLC is a 501(c)(6) membership association open to all retailers and select law firms.