Arizona Business Owner Complains Louisiana Sales Tax is Unconstitutional for Out-of-State Sellers

Louisiana is facing complaints from an Arizona jewelry wholesaler claiming that their sales tax system is unconstitutional due to its compliance burdens on out-of-state sellers. Louisiana is a home rule state and has 64 parishes (localities) with different sales tax administration requirements. Other states with local taxes such as Texas and South Dakota are examples of states that were able to simplify their sales tax administration for out-of-state sellers. The Arizona business argues that this violates the 2018 Supreme Court South Dakota v. Wayfair decision’s commerce clause and due process clause. There have been indications of further lawsuits. (Eastern District of Louisiana, Halstead Bead, Inc. v. Lewis et al 2:21-cv-02106, filed November 15, 2021)

UPDATE: Halstead Bead filed a response brief in the U.S. District Court for the Eastern District of Louisiana that explains the argument against Louisiana’s sales tax systems as an unconstitutional burden on interstate commerce. The new Secretary of Revenue for Louisiana, Kevin Richard, is trying to dismiss the case under several federal procedural rules and has questioned the court’s jurisdiction to hear the case. Richard argues that “in the absence of a waiver, the Eleventh Amendment bars Halstead from obtaining an award of damages against him.” Halstead argues in response that Louisiana defendants are violating federal law by enforcing the filing and reporting requirements.

Posted on March 17, 2022