Sales tax in the news: Louisiana sued for complex sales tax system

by Sarah Craig February 25, 2022

Updated July 26, 2023

With the recent passing of Louisiana House Bill 558, which requires the implementation of a single sales tax remittance system for taxpayers, Halstead Beads has issued a statement that states that they believe they will no longer be subject Louisiana’s unconstitutional tax system.

February 25, 2022

The state of Louisiana has been sued by an Arizona-based online retailer, Halstead Beads, for its complex sales tax compliance requirements. Filed in November 2021, the suit claims that the “patchwork” approach to filing and remittance in the state creates a “compliance nightmare.” 

Similar to counties or boroughs in other states, Louisiana is divided into what they call parishes. The current sales tax system in Louisiana requires businesses to maintain sales tax reports, collect sales tax, and remit in each individual parish where they do business. 

The suit was filed just a few days after voters in Louisiana rejected a proposed amendment that, if passed, would have created a single, unified sales tax collection system, rather than the current parish-by-parish process. 

Halstead Beads is asking the court in Louisiana to remove the complex system in place and “declare it an unconstitutional burden on interstate commerce.”

What makes Louisiana sales tax so complex?

So how many parishes are we talking about? 64 in total. For small businesses especially, maintaining sales tax compliance in Louisiana alone can be a full-time job. Not to mention the other states you also need to report, file, and remit sales tax. 

In addition to the parish-by-parish system, another reason sales tax compliance is cumbersome is due to the large number of exemptions, exclusions, and sales tax credits in the state. It’s difficult for sellers to even determine if they should be charging sales tax on a product. The state has 192 total sales tax exemptions, exclusions and credits in place. 

Louisiana also has the highest combined state and local sales tax rate in the United States, and studies show that consumers are willing to leave and complete high-value purchases where they know the tax rate is lower. When you are looking to expand your business to different states, these are the types of factors you would consider and this information could deter you from expanding to certain areas. Halstead Beads has decided to limit sales in Louisiana while the current system is in place. For some companies, the cost of compliance outweighs the increase in sales.

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How TaxJar can help 

We’ll be keeping an eye on this lawsuit and will keep you updated with any changes being made in Louisiana. In the meantime, TaxJar can help you stay compliant in Louisiana and throughout the country.

The TaxJar API applies rooftop-accurate rates, which means that sales tax calculations are based on your customer’s state, county, city, or even parish. We also research and implement sales tax changes when they arise, so if changes do come out of Louisiana, we’ll make the necessary updates on our end, so you can continue focusing on growing your business.  Try TaxJar for 30 days for free, and see the difference for yourself.

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