Louisiana is joining the ranks of states attempting to require remote online sellers to notify their buyers about “use tax.”
Before I go any further, it’s important to note that this new law does not mean that online sellers with no sales tax nexus in Louisiana are required to collect sales tax in Louisiana. Like the current Colorado law, this law is attempting determine how much Louisiana residents have bought online without paying sales tax, and to use online sellers to remind Louisiana taxpayers of their use tax obligation on those purchases.
What Does This Louisiana Law Mean for Online Sellers?
According to the new Louisiana law, sellers who meet these two criteria are required to inform Louisiana buyers about their use tax liability:
- Sellers who are not required to collect sales tax in Louisiana (i.e. sellers with no sales tax nexus in Louisiana); and
- Who’s total gross receipts in Louisiana exceed $50,000 per year
If you fit these categories, the new law requires you to do three things:
- When you make a sale to a buyer in Louisiana, notify the buyer at the time of purchase that they are required to pay Louisiana use tax on the purchase. The notice should state that items bought on the internet are not tax exempt and that the buyers should pay use tax either on their annual income tax return or by other means as required by the Secretary of the Louisiana Department of Revenue
- By January 31st, send a notice to Louisiana buyers who made a purchase from them in the preceding calendar year. The notice should be sent in an envelope labeled “IMPORTANT TAX DOCUMENT ENCLOSED” and include a list of dates and the amounts of purchases (and if known by the retailer) whether the property is exempt from sales tax. This notice should disclose the name of the retailer, that the buyer is required to pay use tax. The notice should not be sent along with any other shipment or mailing from the retailer.
- By March 1st, file with Louisiana’s secretary of the Department of Revenue an annual statement for each purchaser which includes the total amount paid by the buyer to the retailer during the preceding calendar year. The statement should under no circumstances contain detail of the items purchased. The statement should be submitted on a form developed by the Louisiana Secretary of the Department of Revenue.
The law goes on to give the Secretary of the Department of Revenue of Louisiana the power to subpoena remote sellers who do not comply. It also further states that any remote seller who makes a sale into Louisiana consents to the jurisdiction of the courts of Louisiana and the Board of Tax Appeals.
This law goes into affect July 1, 2017.
This law is very similar to another law passed in Colorado recently, so I want to direct readers to our in-depth analysis on our “What Does the Colorado Amazon Sales Tax Law Mean for Online Sellers?” Long story short, we think this is another attempt by states to degrade the precedent set by Quill v. North Dakota. After living and breathing sales tax every day, I’m of the opinion that states are attempting to pass laws either expressly designed to provoke a lawsuit to challenge Quill and the whole concept of nexus, or to push Congress to act on an “internet sales tax” law. Whether or not this Louisiana law goes into affect — and whether the state can enforce it, remains to be seen. Keep reading this blog for updates as they happen.
Do you have any questions or comments about Louisiana’s new law aimed at remote online sellers? Start the conversation in the comments!