Louisiana lawmakers introduce new internet sales tax bill

Update 6.18.2019: HB 547 has been enacted. It doesn't provide an effective date for economic nexus but does state that it will be published "no later than thirty days prior to the effective date of the enforcement. In no event shall the date of enforcement be later than July 1, 2020.” Once economic nexus takes effect, a remote seller will have 30 days to register and 60 days to commence sales tax collection and remittance after surpassing the economic nexus threshold of $100,000 in sales or 200 transactions in Louisiana. The new law does not impose a sales tax collection obligation on marketplace facilitators.

Louisiana enacted a remote sales tax law on June 12, 2018, but it hasn’t ever enforced it. Now the Louisiana Legislature is considering another bill that would require out-of-state sellers and marketplace facilitators to collect and remit Louisiana sales tax starting July 1, 2019.

Until June 21, 2018, when the Supreme Court of the United States issued a decision on South Dakota v. Wayfair, Inc., states could only impose a sales tax collection obligation on businesses with a physical presence in the state. The court found the physical presence rule to be “unsound and incorrect” and overruled it. While physical presence still triggers a sales tax collection obligation, states can now tax remote businesses that have a substantial economic connection with the state, or economic nexus.

Louisiana’s first remote sales tax law was enacted prior to the Supreme Court decision in Wayfair, but it mimicked the South Dakota economic nexus law that led to the demise of the physical presence rule. Under HB 17, an out-of-state retailer is required to collect and remit Louisiana sales tax if, in the current or previous calendar year, it has more than $100,000 in gross sales or at least 200 transactions for delivery in the state.

Louisiana initially planned to enforce its economic nexus law starting January 1, 2019. However, in December 2018, the Louisiana Department of Revenue delayed enforcement until “a date to be determined in 2019.” It promised to give remote sellers at least 30 days’ notice prior to the commencement of mandatory collection requirements. There have been no further updates from the department.

House Bill 547 was filed with the Legislature on March 29, 2019. It maintains the original law’s economic nexus threshold: An out-of-state seller is required to obtain a sales tax permit and collect and remit Louisiana state and local sales and use tax if, during the current or previous calendar year:

• It has more than $100,000 in gross revenue from sales of tangible personal property, products transferred electronically, or services for delivery within Louisiana; or
• It sold tangible personal property, products transferred electronically, or services for delivery within Louisiana in 200 or more separate transactions.

However, HB 547 does amend the 2018 remote sales tax law in several ways:

• It allows the Louisiana Sales and Use Tax Commission for Remote Sellers to require remote sellers to collect and remit sales tax if the Supreme Court of the United States overrules the physical presence requirement (which, of course, it did).
• It defines a “remote sale” as a sale “made by a remote seller or facilitated by a marketplace facilitator on a marketplace for delivery into Louisiana.”

Once a remote seller or marketplace facilitator surpasses the threshold, it has no more than 30 calendar days to apply to collect state and local sales and use tax on remote sales for delivery into Louisiana. If the commission approves the application, the seller or marketplace must start collecting sales tax no later than 60 days after surpassing the $100,000 sales or 200 transactions threshold.

Collection duty for marketplace facilitators

With respect to sales occurring through a marketplace, HB 547 considers the marketplace facilitator to be the “dealer” once it has surpassed the $100,000 sales and/or 200 transactions economic nexus threshold. (Fun fact: States use different terms to describe a dealer, such as retailer, seller, or vendor.)

In other words, the marketplace facilitator, not the individual marketplace seller(s), is responsible for registering with the state and collecting and remitting sales and use tax on all taxable sales made through the platform — even those by an individual seller that has not itself met either economic nexus threshold. Any tax collected must be filed and remitted monthly, by the 20th day of the month following the reporting period.

Any seller that makes sales through multiple channels, including its own ecommerce store or a non-collecting marketplace, is required to register and collect and remit tax on those sales. The measure doesn’t specify whether a marketplace seller that only makes sales through a collecting marketplace needs to register with the state, though it does say the marketplace is considered the dealer in such situations.

Additional procedures or rules may be adopted by the Louisiana Sales and Use Tax Commission for Remote Sellers.

See a list of states that require remote sellers to collect and remit sales tax.