Is Louisiana's sales tax system for remote sellers hostile to business? Arizona business appeals decision

Staff Report
Halstead Bead ships beads, chains and other jewelry materials to buyers around the nation.

A small family-run business based in Arizona appealed to the U.S. Court of Appeals after a federal judge dismissed a lawsuit challenging Louisiana's remote seller sales tax structure, which its legal team described as complex and convoluted.

Halstead Bead, a craft and jewelry wholesaler owned by Hilary and Brad Scott, makes online sales across the country. They contend Louisiana's tax burdens are complex and difficult to navigate as businesses must comply with the local sales tax laws of all 64 parishes.

The business has been represented by a team from the National Taxpayers Union Foundation’s Taxpayer Defense Center, the Pelican Institute, and the Goldwater Institute.

According to the Pelican Institute, a federal judge in the Eastern District of Louisiana dismissed Halstead's lawsuit, interpreting the Tax Injunction Act to mean it should be filed in a state court rather than federal court.

"Halstead is not challenging any ‘assessment, levy, or collection’ of Louisiana taxes but rather the steps before assessment, like duplicative submission of monthly returns, fragmented definitions and exemptions that vary by parish, and an impenetrable web of local variations,” stated Joe Bishop-Henchman, NTUF executive vice president and lead attorney on the case. “The state says we can pay and file for a refund, but there is no refund to ask for when the problem is how to pay, not how much. Halstead wants to remit all applicable taxes. We should be able to bring our evidence to court, and so the District Court should be reversed."

The company and its legal team argued the dismissal was unwarranted and that the case should be considered, citing the U.S. Supreme Court case South Dakota v. Wayfair, which found that states could impose remote sales tax collection obligations as long as the obligations were not overly complex or burdensome.

"The way Louisiana collects sales tax signals to the rest of the country that the state is hostile to business,” stated Sarah Harbison, General Counsel at the Pelican Institute. “Practices like these turn entrepreneurs like the Halsteads away from doing business here. That harms Louisiana consumers, who deserve to have the same market options enjoyed by everyone else in the country."

Tom and Suzie Halstead launched Halstead Bead, Inc. in Phoenix in 1973. The business is based in Prescott, Arizona.