Halstead Bead v. Lewis
Louisiana’s Tax Code Should Not Be Unconstitutionally Complicated, Driving Away Business and Raising Prices for In-State Consumers
Outcome: Victory! On May 30, 2023 and June 14, 2023, Governor John Bel Edwards signed into law Act 15 and Act 375 respectively that resolved the issues raised by Halstead Bead’s suit.
Hilary Halstead Scott and her husband Brad are business owners who brought their products to the nationwide marketplace in the 1990s. Hilary and Brad run Halstead Bead, Inc., a family-owned business specializing in jewelry-making supplies. The Halsteads live and work in Prescott, AZ but their jewelry supplies are available to crafters throughout the country through their eCommerce site—unless you live in Louisiana.
Halstead Bead has to limit its sales into Louisiana because of the state’s antiquated and overburdensome sales tax laws. The Louisiana state constitution allows more than fifty sales tax collection authorities, with collectors setting their own tax rates and categories. For example, in Lafourche Parish, there are several towns but also several consolidated road districts, each with its own sales and use tax rates. Tangipahoa Parish, with just over 134,000 residents, has nine different jurisdictions. And in Washington Parish, Halstead Bead must figure out which addresses are within the Fourth Ward but outside Bogalusa Limits. If the Halsteads get the rates wrong, they could be held personally liable for misapplied sales taxes. The compliance nightmare created by this scheme means that it is easier for the Halsteads to miss out on the opportunity to sell to Louisiana residents than to try to comply with our sales tax laws.
Louisiana’s sales tax regime violates the commerce Clause to the U.S. Constitution, and the Due Process Clause of the Fourteenth Amendment. That’s why the Pelican Institute, along with the National Taxpayers Union Foundation and the Goldwater Institute have joined to ask that a federal court declare Louisiana’s parish-by-parish sales and use tax registration an unconstitutional burden to interstate commerce. Louisiana’s patchwork sales tax collection scheme is contrary to the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair. In that case, the Court ruled that states could require sellers to collect and remit sales tax so long as the state’s rules did not create an undue burden on interstate commerce. Louisiana’s tax collection laws are patently unfair to out-of-state sellers like Halstead Bead.
“This is crushing liability,” say the Halsteads, “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. It’s overwhelming, and both businesses and consumers alike suffer because of the fragmented nature of the Louisiana sales tax collection system.”
“Unfortunately, what we see is that Louisiana is criminalizing small business normalcy. We don’t have the tools, we don’t have the resources, but we still have the same compliance demands, and it’s overwhelming, and at times I fear for the future of our small business and a lot of others.”
“And we talk to a lot of other companies. We know them. They’re people just like us. And they’re feeling just as stressed and overwhelmed as we are. They feel just as threatened by the liability of all these different jurisdictions. We need to see meaningful reform and if a lawsuit is the best way to move that forward, then we’ll do it.”
Complaint. On November 15, 2021, a Complaint on behalf of the Halsteads was filed in the Eastern District of Louisiana against a group of Louisiana tax collectors. The case was assigned to the Honorable Jane Triche Milazzo.
Defendants’ Motion to Dismiss. On December 27, 2021, Defendants’ filed a Motion to Dismiss Plaintiff’s Complaint. On February 15, 2022, Plaintiff’s filed a Response in Opposition to the Motion to Dismiss.
District Court’s Order and Reasons. On May 23, 2022, the district court granted the Motion to Dismiss.
5th Circuit Briefs. On June 21, 2022, a Notice of Appeal was filed with the Fifth Circuit Court of Appeals. On October 11, 2022, the Appellant Halstead Bead’s Opening Brief was filed. On December 13, 2022, the Appellee Brief was filed. On January 18, 2023, Appellant’s Reply Brief was filed.
Oral Arguments. On Tuesday, May 2, 2023, Oral Arguments were heard.
Legislative Fix. On May 30, 2023 and June 14, 2023, Governor John Bel Edwards signed into law Act 15 and Act 375 respectively that resolved the issues raised by Halstead Bead’s suit.
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The Center for Justice is a public-interest law firm that represents at no cost clients seeking to advance freedom and opportunity in Louisiana and the Fifth Circuit.