Business challenges Louisiana sales tax system in lawsuit

Louisiana News

BATON ROUGE, La. (AP) — An out-of-state business Monday sued Louisiana and several parishes to challenge the state’s patchwork approach to collecting sales taxes, days after voters rejected a constitutional change that would have centralized those tax collections in a single board.

Halstead Bead Inc., an Arizona-based business that sells jewelry-making supplies online, said Louisiana’s approach of collecting sales taxes on a parish-by-parish basis and requiring out-of-state businesses to file reports in each parish where sales are made creates a “compliance nightmare.”

The company is asking the court to declare Louisiana’s fragmented sales tax registration and remitting requirements an unconstitutional burden on interstate commerce, among other violations of federal constitutional protections.

Halstead Bead is represented by small-government, right-leaning groups including the National Taxpayers Union Foundation, the Pelican Institute for Public Policy and the Goldwater Institute.

“Louisiana makes it extremely hard to do business in the state because of the countless hours and dollars it takes to ensure accurate compliance with all of the taxing jurisdictions,” Brad Scott, Halstead’s finance director, said in a statement released by the Pelican Institute. “We don’t have the tools, we don’t have the resources, but we still have outrageous compliance demands.”

The lawsuit was filed Monday morning in federal court in New Orleans. It names as defendants state Revenue Secretary Kimberly Lewis and the sales tax collectors in Lafourche, Tangipahoa and Washington parishes.

A spokesperson for Lewis said the department doesn’t typically comment on ongoing litigation.

Louisiana lawmakers sought to streamline the sales tax collection process through an eight-member commission, rather than through the more than 50 local government agencies ranging from sheriffs and mayors to school boards that currently do the work.

The constitutional change passed the Legislature earlier this year with unanimous support from Republicans and Democrats and with the backing of Democratic Gov. John Bel Edwards. Supporters said Louisiana is one of only three states that handle sales tax collections through such a hodgepodge of local government agencies, and they argued it was too burdensome for businesses.

But voters in Saturday’s election rejected the centralization proposal, according to complete but uncertified results from the secretary of state’s office. The results showed 52% of those who cast ballots in the election opposed the change. The Associated Press did not tabulate the race results.

Critics of the constitutional amendment pointed to uncertainty on the details of how the eight-member commission would work, because lawmakers still had to draft the specific regulations. They argued it would tie up sales tax collections in state bureaucracy. New Orleans Mayor LaToya Cantrell came out strongly in opposition to the proposal, arguing the commission could withhold sales taxes owed to municipalities when state officials are unhappy with local decisions.

Halstead said in its lawsuit that it plans to limit its sales in Louisiana while the current sales tax collection regulations are in place.

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Follow Melinda Deslatte on Twitter at http://twitter.com/melindadeslatte.

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