Release: Louisiana’s Sales Tax System is Unconstitutionally Complex
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New Orleans — Yesterday, Halstead Bead’s attorneys filed a reply brief in the U.S. Court of Appeals for the Fifth Circuit. The brief is part of its legal challenge to Louisiana that forces out-of-state small businesses to comply with an overly complex local tax system. Halstead Bead, a family-owned jewelry and craft supply business in Prescott, Arizona, is suing the state of Louisiana to seek relief from the burdens this system places on entrepreneurs.
“Federal courts are an option for parties like the Halsteads to vindicate their constitutional rights when a state court venue is foreclosed,” said Sarah Harbison, General Counsel at the Pelican Institute. “The Halsteads are willing to do what it takes to offer their jewelry supplies to Louisiana customers, but Louisiana’s byzantine sales tax collection scheme makes compliance too costly. Countless other online retailers from across the country are similarly burdened. Louisiana residents lose out on options and on the revenue the state could be collecting.”
In the litigation, Louisiana has argued that its tax rules are not complex and that they have provided sales tax rate lookup tools for compliance with tax issues. Halstead Bead disputes this claim, however, as none of these tools are official. Moreover, they argue the only way to stay up to date with updates to the tax system is for sellers to call the local parishes one by one.
“It is not unusual that the parties, in this case, dispute the facts, especially in a case that involves questions of constitutional rights,” said the National Taxpayers Union Foundation’s Joe Bishop-Henchman. “But because Halstead Bead is not suing for refund, the state courts and Board of Tax Appeals are closed to them, and federal courts are the only option to protect their important constitutional rights. The state and parishes’ arguments that this is not a case for federal courts simply doesn’t hold water.”
Halstead Bead is being represented by a team of attorneys from the Pelican Institute for Public Policy, the Goldwater Institute, and the National Taxpayers Union Foundation’s Taxpayer Defense Center.