Louisiana Enacts Marketplace Nexus Legislation

Effective July 1, 2020, Louisiana has enacted marketplace nexus provisions. A marketplace facilitator will be considered the dealer for each remote sale for delivery into Louisiana and transacted on a marketplace on behalf of a marketplace seller. A marketplace facilitator shall collect and remit state and local sales and use tax on all taxable remote sales for delivery into Louisiana that the marketplace facilitator transacts on its own behalf or facilitates on behalf of a marketplace seller, if during the previous or current calendar year, either of the following thresholds is met:

• The marketplace facilitator’s gross revenue for sales delivered into Louisiana exceeded $100,000 from sales of tangible personal property, products transferred electronically, or services.
• The marketplace facilitator sold for delivery into Louisiana tangible personal property, products transferred electronically, or services in 200 or more separate transactions.

In determining whether the above criteria have been met, all remote sales shall be considered including direct and facilitated sales. No later than 30 calendar days after meeting either of the above criteria, a marketplace facilitator shall submit an application for approval to collect state and local sales and use tax on remote sales to the Louisiana Sales and Use Tax Commission for Remote Sellers (Commission) on a form prescribed by the Commission. For remote sellers or facilitators that exceed the threshold as of July 1, 2020, an application must be filed no later than July 31, 2020. A marketplace facilitator shall commence collection of tax once they are notified that the Commission has approved the application, no later than 60 days after meeting either of the above criteria or by August 30, 2020. Remote sellers/marketplace facilitators will not be required to register with each Parish but will be required to collect the actual tax for each Parish based on the delivery address.  For those sellers that have been registered as a Direct Marketer and collecting the flat 8.45% rate, their registration will be converted to the Remote Seller registration if their sales have exceeded the threshold.

For remote sales transacted on a marketplace, the marketplace facilitator shall be responsible for the determination of taxability of remote sales for delivery into Louisiana. If a marketplace facilitator fails to collect tax due to incorrect or insufficient information provided by a marketplace seller, the marketplace facilitator shall be relieved of liability, provided that the relief shall not exceed 5% of the total sales tax due from sales made or facilitated in Louisiana by the marketplace facilitator. If the marketplace facilitator is relieved of liability, the marketplace seller is liable for the tax due. Note that no relief will be permitted for remote sales made by an affiliated marketplace seller.

The legislation amends the term “remote seller” to include “marketplace facilitators.” “Marketplace facilitator” means any person that facilitates a sale for a marketplace seller through a marketplace by any of the following:

• Offering for sale through any means, by a marketplace seller, tangible personal property or sales of services for delivery into Louisiana; OR
• Collecting payment from the purchaser and transmitting all or part of the payment to the marketplace seller, regardless of whether the person receives compensation or consideration in exchange for facilitating the sale or providing any other service through any arrangement with one or more third parties.

“Marketplace facilitator” shall not include any of the following:

• A platform or forum that provides advertising services, so long as they don’t also engage in the activities described above.
• A payment processor that only handles payments between the marketplace facilitator and purchaser.
• A derivatives clearing organization, a designated contract market, foreign board of trade or swap execution facility, registered with the Commodity Futures Trading Commission (CFTC registered platforms), and any clearing members, futures commission merchants, or brokers when using the services of CFTC registered platforms.
• Any person who offers or facilitates the furnishing of sleeping rooms, cottages or cabins by hotels or who offers or facilitates the furnishing of rental cars by rental car companies.

(S.B. 138 (Act No. 216))

UPDATE: The Louisiana Sales and Use Tax Commission for Remote Sellers has launched a website that includes a helpful FAQ section. One FAQ lends insight into what types of sales remote sellers must include towards the economic nexus threshold: “The remote seller should only consider direct sales for delivery into Louisiana to calculate whether the economic nexus thresholds have been met. The sales made through a marketplace may be excluded because those sales determine whether the marketplace itself meets the economic nexus thresholds.”