Update: NFIB Supports Small Business in Louisiana Tax Court Case

Date: November 02, 2022

NFIB member challenges Louisiana tax system in court

On Oct. 18, the NFIB Small Business Legal Center joined with other business advocacy groups and a tax compliance company to file an amicus brief in Halstead Bead v. Richards at the U.S. Court of Appeals for the Fifth Circuit. Halstead Bead, an Arizona jewelry wholesaler and NFIB member, is seeking to reverse a lower court’s decision rejecting their challenge to Louisiana’s decentralized sales tax system. 

NFIB argued that the judge wrongly concluded that the Tax Injunction Act (TIA) barred the court from considering Halstead’s claim that Louisiana’s sales tax system imposed an unconstitutional burden on out-of-state remote sellers. The judge held that the case was better heard by the Louisiana state judiciary because the TIA forbids federal courts from stopping an “assessment, levy or collection” of state taxes when the state courts offer “a plain, speedy and efficient remedy.” 

Halstead argued that because it was not challenging a tax assessment, the TIA should not bar the federal court from considering its case.  

NFIB’s amicus brief argued that the district court’s interpretation of the TIA leaves no neutral and viable judicial forum for remote sellers to challenge state sales tax regimes. This is so because many states, including Louisiana, directly elect their state judges leading to a potential bias in favor of the state’s citizens and the state’s interests. . The brief also argued that Louisiana’s sales tax regime is unduly burdensome, both to remote sellers and in-state small businesses. 

“Louisiana’s small businesses have consistently ranked taxes and tax-related issues as a top problem in running their business,” said Dawn McVea, NFIB Louisiana State Director. “Unfortunately, the district court’s interpretation on the Tax Injunction Act leaves small businesses in an uncertain situation and exacerbates the already difficult tax system. We are urging the Court of Appeals to consider small and independent businesses and ultimately reverse the lower court’s decision.” 

The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court. 

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