Louisiana Law Levels Playing Field for Main Street Retailers [4]

Starting April 1, certain remote retailers will be required to collect and remit Louisiana sales tax, as a result of e-fairness legislation passed earlier this month, TaxRates [6] reported.

Tom Lowenburg, co-owner of Octavia Books [7] in New Orleans testified in favor of the bill last month in front of Louisiana’s House Ways & Means Committee and is pleased that the bill was signed into law.

“We have more and more states working to protect their economies and it’s certainly about time that Louisiana did,” said Lowenburg, who noted that Louisiana will become the 29th state where Amazon is collecting sales tax. “It’s going to protect the economy and it will level the playing field at a time when the state desperately needs to collect these funds,” he added.

In response to a state revenue shortfall, lawmakers convened a special session in February to review proposals to close the budget gap.

Lowenburg’s testimony in support of the law was bolstered by data provided by Dan Houston of Civic Economics, which worked with the American Booksellers Association on the new study “Amazon & Empty Storefronts [8].” The study’s data reveals the overall negative impact that Amazon has had on Main Street retailers and jobs, and the communities in which they are located, across the country.

The report notes that Amazon sold $604 million in retail goods to Louisiana consumers in 2014, which, based on prevailing sales tax rates on that revenue, amounts to uncollected sales taxes of $54.4 million.

H.B. 30, authored by State Rep. Walt Leger (D-New Orleans), imposes the collection of sales and use taxes due on sales made in Louisiana by a remote dealer if its cumulative sale of goods to customers in the state exceeds $50,000 during the preceding 12 months.

The law extends the definition of dealer to include people who solicit business through an independent contractor or “any other representative pursuant to an agreement with a Louisiana resident or business under which the resident or business, for a commission, referral fee, or other consideration of any kind, directly or indirectly, refers potential customers, whether by link on an Internet website, an in-personal oral presentation, telemarketing, or otherwise to the seller.”

Shoppers in Louisiana are currently required to self-report Internet purchases on their taxes. In April, the state portion of Louisiana sales tax will increase by a penny, to five cents per dollar spent; customers also pay local taxes based on their parish.

Funds generated by the new law will be split between state and local governments.

“It’s going to raise significant money and it’s a big step forward that will be good for local businesses here. It’s addressing something that needed to be addressed for a long time,” said Lowenburg. Though he added, “It doesn’t address some of the things national legislation would address because there are companies that don’t have nexus in the state.”

Last year, Louisiana Gov. Bobby Jindal (R) vetoed H.B. 555 [9], a similar bill that would have required remote retailers with a broad network of affiliates in the state to collect and remit sales tax in the state.