Exploring Louisiana’s Surprise Sales Tax Decision and Its Implications
With the Supreme Court’s recent Wayfair decision, giving states the right to require out of state sellers to collect sales tax, a lot of complicated questions have come up. One of the thorniest is the position of online marketplaces like Etsy, eBay, and Amazon, not to mention Walmart.com. So far, these marketplaces have been held responsible for collecting and remitting sales tax in most cases — sometimes even retroactively.
So it’s a surprise that Louisiana has held that Walmart.com is not responsible for collecting sales tax for its marketplace sellers. Why not? In a 4-3 split decision, the court says Walmart is more like an auctioneer than a dealer.
Huh?
Marketplace facilitators
Walmart.com, like Amazon and Etsy, and eBay, allows individuals and other companies to sell things on their platform. In this context, they serve as marketplace facilitators, not as dealers. The people selling things at Walmart.com were not told to collect sales tax, but they also weren’t prevented from collecting sales tax, according to the majority opinion.
While the dissenters said Walmart in this case is very clearly a dealer — after all, shoppers may not even realize that they aren’t buying directly from Walmart — the majority opinion concluded that Walmart in this case is more like an auctioneer. They benefit financially from the sale, but they aren’t selling something directly.
Walmart’s legal team took it a step further. They suggest that a ruling on this issue could affect anyone who facilitates a purchase in any way, including credit card companies. They’re not selling anything, but they are helping sales to take place. Should they be responsible for sales tax compliance?
Does this ruling affect you?
If you’re responsible for sales tax in Jefferson Parish and you could be considered a marketplace facilitator, this does affect you. It doesn’t establish a precedent for other states. However, others around the nation are watching this case, because it brings up some complicated issues.
What about trade shows? Many states have examined whether making sales at trade shows establishes nexus. Does holding a trade show open the organizers of the show to sales tax responsibility? Is it time to reexamine the definition of “dealer” or “seller”? Does the case provide opportunities for other kinds of challenges to state sales and use tax laws? How many changes will be made in jurisdictions across the country in reaction to this legal decision?
Fortunately, Sales Tax DataLINK sales tax reporting software keeps you up to date on all the sales tax regulations in each jurisdiction. Our sales tax experts can take care of the entire sales and use tax compliance jobs for your company with no anxiety on your part.
