Walmart.com has only about $140,000 directly at stake in a tax fight with a Louisiana parish. But the company’s court challenge to that amount may have ramifications for other online marketplace providers and for Walmart’s operations elsewhere in the state and nationwide.
The case has to do with Walmart.com’s role as facilitator of third-party sales. Jefferson Parish, which is allowed under Louisiana law to administer and collect its own separate sales taxes, says the company shirked its tax obligations for years on those sales through its online marketplace.
Walmart.com and its supporters say the issue should be a matter for the Louisiana Legislature, not the courts.
If the Louisiana Supreme Court rules for the parish, the Washington-based Tax Foundation says, it could signal “open season on retroactive tax collection from out-of-state sellers and marketplace facilitators.” It would also be unconstitutional and would undermine the U.S. Supreme Court’s decision in South Dakota v. Wayfair, the think tank said in a brief.
The court is to hear oral arguments Sept. 4.
The 2018 Wayfair decision tossed out the physical presence standard the U.S. high court affirmed in its 1992 Quill Corp. v. North Dakota, which limited the ability of states to tax remote sales. Since Wayfair, dozens of states have passed versions of a South Dakota law requiring collection of sales tax from remote sellers with more than $100,000 of in-state sales or 200 in-state transactions. Many states also are pushing to make marketplace facilitators—such as Etsy and eBay—collect and remit sales tax for transactions on their online platforms.