Small Business Owners Disappointed in Court's Decision in Louisiana Tax Case

Date: July 11, 2023

The lawsuit is credited with prompting lawmakers to pass legislation to address the issue

NFIB State Director Dawn McVea said today small business owners are deeply disappointed by a federal court’s recent decision upholding the state’s interpretation of the Tax Injunction Act and Louisiana’s sales tax. The decision on the case of Halstead Bead v. Richards was handed down July 7 by the U.S. Court of Appeals for the Fifth Circuit.

“Louisiana’s small businesses consistently rank taxes and tax-related issues as a top problem in running their business,” McVea said. “Unfortunately, the court’s interpretation of the Tax Injunction Act leaves small businesses in an uncertain situation,” McVea said. “It still isn’t clear whether Louisiana’s tax code is fully compliant with the Supreme Court’s Wayfair decision.” In the case of South Dakota v. Wayfair Inc., the U.S. Supreme Court ruled that states may charge tax on purchases made from out-of-state sellers even if the seller does not have a physical presence in the taxing state.

However, the Louisiana Legislature recently passed two bills that should help clarify matters for small business owners, McVea said.

“Out-of-state retailers may find some benefit in changes brought about by HB 171, which removes the transaction limit for marketplace facilitators as well as changes the calculation of gross revenue to exclude wholesale and sale for resale transactions,” McVea said.

“A second bill, HB 558, will help in-state businesses who file in multiple parishes using the complicated and time-consuming Parish E-File system. Under the bill, these businesses will have the opportunity to use the Uniform State and Local Sales Tax Board going forward.

“While not the most effective and direct path toward a centralized sales tax collection system, these two measures will likely help ease the compliance burden,” McVea said. “We believe Halstead Bead v. Richards prompted legislators to pass these two bills and provide Louisiana’s Main Street businesses with greater certainty going forward.”

The NFIB Small Business Legal Center joined the Manhattan Institute, the Louisiana Association of Business and Industry and the State Chamber of Oklahoma Research Foundation Legal Center in filing an amicus brief in the case. They argued that the district court’s interpretation of the Tax Injunction Act leaves no neutral and viable judicial forum for remote sellers to challenge state sales tax regimes. They also said Louisiana’s sales tax regime is unduly burdensome to both remote sellers and in-state brick-and-mortar small businesses.

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 and in the U.S. Supreme Court.


Related Content: Small Business News | Louisiana

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