Louisiana is one of just two U.S. states that isn’t prepared to tax internet sellers, according to the Tax Foundation, but it’s getting closer to reshaping its sales tax landscape so that it can require sales tax collection by out-of-state internet retailers who sell in the state—also known as “remote sellers.”
State leaders are taking their cues from South Dakota v. Wayfair, in which the U.S. Supreme Court ruled that a state sales tax can be constitutionally collected, so long as the law follows a “Wayfair checklist,” not discriminating against or placing excessive burdens on those engaging in interstate commerce.
However, Louisiana does not comply with the checklist, making the state, along with Colorado, one of two “red light” states in the country.
In keeping with the Wayfair ruling, Louisiana enacted a law during the 2018 second special legislative session adopting a $100,000, or 200-transaction, threshold, which is set to take effect Jan. 1. And in 2017, the state established a new Sales and Use Tax Commission for Remote Sellers to serve as the single collection entity for remote seller sales taxes, and a Uniform Local Sales Tax Board to promote uniformity and efficiency in local sales tax administration. While both of these new entities have only just begun their work, there is discussion that remote sellers might collect at a uniform rate of 8.45%.
Under existing law, Louisiana permits each of its 370 tax jurisdictions to administer, collect and audit its sales tax separately, and define its base independently of the state sales tax base. To take full advantage of the Wayfair ruling, the state should restructure its sales tax laws to include centralized collection of all sales taxes and uniformity between the state and local bases, the Tax Foundation suggests.
