Louisiana Supreme Court Strikes Down Marketplace Facilitator Collection Requirement

Charles Maniace
February 5, 2020

In an interesting (but not earth shattering) development, on January 29, 2020 the Louisiana Supreme Court held that Jefferson Parrish could not hold Walmart.com liable to collect and remit sales tax on transactions made by third party sellers through their online platform. In short, Walmart.com is not a “dealer” as that term is defined under Louisiana law. While important with respect to evaluating the ability of states to pursue marketplaces retroactively (particularly in Louisiana), this case has very little impact on the current and future landscape of tax compliance in the post-Wayfair era.

Since the groundbreaking Supreme Court decision in South Dakota v. Wayfair, virtually every state in the country has enacted rules or requirements compelling remote sellers to collect and remit tax based on an economic nexus standard. While some states enacted bills to enable remote collection, many did so via rules or regulations. While Kansas faced some backlash from their own Secretary of State regarding their rule, most others have imposed these new requirements without controversy. The key is that many states had existing statutes in place allowing the Department of Revenue to enforce their sales tax requirements to the “maximum extent” allowed under the law. When the Court in Wayfair changed the “maximum extent,” states were able to tweak their rules quickly.

Faced with the daunting reality of administering compliance for thousands of remote sellers, 38+ states enacted “Marketplace Facilitator” requirements. Marketplace Facilitator rules are a very different beast from economic nexus. In the case of economic nexus, states are casting a wider net, bringing more sellers under their jurisdiction than had been allowed before. Most of these sellers were required to charge sales tax in at least one state prior to Wayfair, and now are required to do so in more.

By contrast, until very recently, Marketplace Facilitators had no sales tax compliance responsibilities as it related to their marketplace clients. Granted, some marketplaces also sell directly and for those sales, tax collection was always fair game. But, it’s an entirely novel idea to make facilitators collect tax on a sale where they are merely bringing the buyer and seller together. This idea was likely not considered when states initially drafted their sales tax statutes and it seems reasonable for the Louisiana Supreme Court to require the legislature revisit their laws and clearly articulate such a requirement to eliminate any ambiguity or confusion.

While Wamart.com scored a victory here, its’ impact should not be overstated. This case involved transactions from a time well before the game-changing Wayfair decision and well before states began amending their laws to compel Marketplace Facilitator collection. The ruling does not suggest that Marketplace Facilitator laws are unconstitutional or overly burdensome. All it says is that you can’t enforce such a requirement in Louisiana until the necessary legislation is in place. Unlike economic nexus, the states (other than Louisiana) that have enacted Marketplace Facilitator rules have taken the preliminary step of enacting enabling legislation, a step Louisiana could take as well in their upcoming session.

So, if your strategy to manage Marketplace Facilitator requirements depended on state course cases like the one in Louisiana putting these requirements on ice, you should reconsider. While the Louisiana Supreme Court may have put a temporary speedbump down, you can be sure most others are accelerating down a path towards enforcement.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.


Charles Maniace

Charles Maniace is Vice President – Regulatory Analysis & Design at Sovos, a leading global provider of software that safeguards businesses from the burden and risk of modern tax. An attorney by trade, Chuck leads a team of attorneys and tax professionals responsible for all the tax and regulatory content that keeps Sovos customers continually compliant. Over his 15 year career in tax and regulatory automation, he has provided analysis to the Wall Street Journal, NBC and more.
Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

North America ShipCompliant
May 14, 2021
Alabama Is Latest State to Permit Direct-to-Consumer Shipping of Wine

Alabama Governor Kay Ivey signed HB 437 into law on May 13, 2021, making Alabama the latest state to legalize direct-to-consumer (DtC) shipping of wine. With this step, only Delaware, Mississippi and Utah continue to prohibit this popular and valuable means of selling wine. Alabama’s new DtC law will not become effective until August 1, […]

Tax Compliance Tax Information Reporting
May 14, 2021
Anatomy of a Due Diligence Letter

What is unclaimed property due diligence? An unclaimed property due diligence letter is an organization’s last chance at contacting an apparent owner and preventing their property from escheatment. Each state or reporting jurisdiction has its own unique set of requirements and standards. Due diligence letters are typically required to be sent 30 to 120 days […]

EMEA VAT & Fiscal Reporting
May 13, 2021
EU Council Approves DAC7 Rules on Digital Platform Tax Reporting

On 22 March 2021 the EU Council approved DAC7, which establishes EU-wide rules meant to improve administrative cooperation in taxation. In addition, the Directive addresses additional challenges posed by a growing digital platform economy. What is DAC7? In 2011, the EU adopted Directive 2011/16/EU on administrative cooperation in the field of taxation in the EU […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
May 13, 2021
Russia Introduces Mandatory E-Invoicing From 1 July 2021

Russia introduces a new e-invoicing system for traceability of certain goods on 1 July 2021. Federal Law No. 371-FZ will amend the Russian Tax Code to introduce the new procedure for the traceability system, which will bring the introduction of mandatory e-invoicing for taxpayers dealing with traceable goods. Since its introduction, B2B e-invoicing in Russia […]

North America ShipCompliant
May 12, 2021
Tennessee Set to Impose Regulations on Fulfillment Houses in DtC Wine Shipments

On May 6, 2021, Tennessee Governor Bill Lee signed HB 742 into law, establishing a slew of new provisions affecting the direct-to-consumer (DtC) shipping of wine in the state. These provisions, however, will not become effective until January 1, 2022. While the bill does impose several new restrictions and requirements on businesses involved in DtC […]