Can Louisiana escape internet tax lawsuit?

Louisiana plans to begin collecting state and local sales taxes on internet sales Jan. 1, 2019, under a dual collection system. A newly created Louisiana Sales and Use Tax Commission for Remote Sellers will collect internet sales taxes and existing state and local governmental agencies will continue collection of other state and local sales taxes.

Tax Foundation of Washington, D.C., believes the dual system could lead to the state facing a lawsuit, but others disagree. The foundation said the existence of 370 local sales tax jurisdictions that operate on their own and 200 tax exemptions creates complexities for retailers. It said the only solution is for the state to form a centralized collections system.

The Council of State Taxation in April of this year released a study titled, “The Best and Worst of State Sales Tax Systems.” Colorado, Louisiana and New Mexico received an “F.” Indiana, Michigan, Ohio and Wisconsin received “A’s.” Thirteen states received “B’s.”

The Advocate interviewed Dan Garrett III, a Baton Rouge attorney who has lobbied for municipal governments, parish police juries and school boards, who said nothing needs to change.

Garrett said newer and more efficient technology has softened historical arguments that both state and local sales taxes can’t be easily collected and remitted. He said a lawsuit would have to allege and prove the Louisiana system is overly burdensome and that would be difficult since it has worked so well already.

John Gallagher, executive director of the Louisiana Municipal Association, said local governments are concerned about long delays in the way funds would be distributed if the state collects all sales taxes.

Mark West, executive director of the Louisiana Association of Tax Administrators, said, “Absent an act of Congress, the state of Louisiana and local governments are going to have to struggle with making sure that any system that we set up does not cause us to be challenged in the courts.”

Kimberly Robinson, secretary of the Louisiana Department of Revenue, told The Advocate, “The (new internet) commission is on track to have the necessary technological and administrative structures in place by January 2019.”

Only time will tell whether the state is doing enough to escape the lawsuit that some think is inevitable.

This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Crystal StevensonJohn Guidroz, retired editor Jim Beam and retired staff writer Mike Jones.

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