Louisiana Imposes Collecting & Remitting Obligation for Marketplace Facilitators
On June 11, 2020, Louisiana adopted S.B. 138, providing new marketplace facilitator legislation to take effect July 1, 2020. This legislative change comes five months after the Louisiana Supreme Court held in Normand v. Walmart.com USA, LLC, La. S. Ct., Dkt. No. 2019-C-00263, that marketplace facilitators did not have an obligation to collect and remit state and local sales and use tax as a “dealer” under Louisiana Revised Statute Section 47:301(4)(l). Wal-Mart.com operated an online marketplace that allowed customers to buy products directly from third-party retailers. Wal-Mart.com only collected and remitted sales tax to the state and various parishes for its portion of sales made through the website and not the third-party sales. Jefferson Parish commenced an action to recover the unpaid taxes from the portion of sales by third-party retailers on the marketplace. The Louisiana Supreme Court held Wal-mart.com did not meet the definition of a dealer under Louisiana Revised Statutes and had no obligation to collect and remit state and local sales tax on behalf of third-party retailers.
The new legislation imposes a registration and filing obligation on marketplace facilitators that meet the economic nexus threshold, regardless of if the marketplace seller is registered as a dealer under Louisiana law. A marketplace facilitator that has $100,000 or more of gross revenue of tangible personal property, products transferred electronically, or services—or 200 or more transactions into Louisiana—must collect and remit the applicable state and local sales and use tax to the Louisiana Sales and Use Tax Commission for Remote Sellers (Commission). Remote sales delivered into Louisiana, including exempt sales, are considered for calculating whether either threshold is met. Prior to the change, Louisiana did not define a marketplace facilitator; however, the new act amended the remote seller definition to include marketplace facilitator.
A marketplace facilitator is now defined in Revised Statute §47:340.1 as “any person that facilitates a sale for marketplace seller through a marketplace owned, operated, or otherwise controlled by the person, 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 other consideration in exchange for facilitating the sale or providing any other service directly or indirectly through any agreement or arrangement with one or more third parties.”
Marketplace facilitators do not include:
- A platform or forum that provides advertising services, as long as they do not 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.
Under certain circumstances prescribed by statute, marketplace facilitators are permitted to contractually agree with the marketplace seller to shift the burden to the marketplace seller to remit the state and local sales and use taxes.
In addition, the legislation repeals the Revised Statute §47:301(4)(l), which defines a dealer as “every person who engages in regular or systematic solicitation of a consumer market in the taxing jurisdiction by the distribution of catalogs, periodicals, advertising fliers, or other advertising, or by means of print, radio, or television media, by mail, telegraphy, telephone, computer data base, cable, optic, microwave, or other communication systems.”
A marketplace facilitator that meets the nexus threshold will have until July 31, 2020, to register as a remote seller with the Commission. For more information, reach out to your BKD Trusted Advisor™ or use the Contact Us form below.