Louisiana to ramp up online sales tax collections following Wayfair ruling
Editors note: This story has been updated to correct a statement that said consumers had until the end of the year to enjoy tax free shopping.
Louisiana has given itself until the end of the year to implement a new process and software for collecting sales taxes from remote online sellers.
The state, in the wake of the South Dakota v. Wayfair U.S. Supreme Court decision, has set a self-imposed Jan. 1 deadline to have the necessary software in place for remote sellers to begin collecting and remitting Louisiana state sales taxes. Out-of-state businesses with more than $100,000 in sales or 200 transactions in Louisiana per year will be required to collect state sales taxes. Numerous large online retailers, like Amazon, already collect state sales taxes on purchases.
The Louisiana Sales and Use Tax Commission for Remote Sellers—a division within the state Department of Revenue established in 2017—will be the single, state-level administrative body responsible for collecting online sales taxes. Remote sellers will have to register and file their taxes with the commission come 2019.
The commission is currently working to establish a software system to assist remote sellers in complying with Louisiana sales tax laws. At a public meeting Thursday, the commission created a technology subcommittee to look into certified software providers.
Meanwhile at least 24 other states, including South Dakota, have joined the Streamlined Sales and Use Tax Agreement, which has set up standardized taxes to reduce administrative burden and cost of compliance for remote sellors. Louisiana, however, has not joined the agreement because of its unique tax system.
The state does not have a uniform state tax collection system because each parish oversees its own sales tax collections, rates and what items they want to be taxed.
“No other state has this degree of local independence and control of its sales tax system,” reported the Public Affairs Research Council of Louisiana in a June policy brief following the Wayfair ruling. “Louisiana has an unusually large number of exemptions and exclusions, and state and local governments lack uniformity about what is taxable.”
But the Department of Revenue is intent on creating a streamlined sales tax collection system to reduce the burden on out-of-state sellers, which is up to the Sales and Use Tax Commission.
“We want a system that makes complying with Louisiana laws as close to streamlined as possible,” says Revenue Department Secretary Kimberly Robinson.
Still, tax attorneys are predicting a major headache for e-commerce businesses as they try to navigate this new world of collecting sales taxes across states with varying rates and collection systems.
The 5-4 Wayfair decision upended the 1992 Quill v. North Dakota case, which restricted states from collecting sales tax from retailers without a physical presence in those states. The new ruling gives all states and local taxing authorities the jurisdiction to collect sales taxes from any business that has a virtual presence within its boundaries.