The Louisiana Sales and Use Tax Commission for Remote Sellers (the “Commission”) has now officially issued its second information bulletin – Remote Sellers Information Bulletin (“RSIB”) 18-002 – which provides a general definition for “remote sellers,” as well as further administrative guidance regarding current and future registration, collection, remittance, and reporting requirements for “remote sellers.”  The Commission issued this final version of the RSIB following lengthy Commission discussions over several weeks and multiple extensions regarding the timing of the Commission’s vote on the RSIB (with an ultimate 6-2 vote in favor of adoption).

A copy of RSIB 18-002 can be found here.

A few items to note regarding RSIB 18-002 are:

Remote Seller Definition

• The RSIB provides a general definition of “remote seller” – i.e., those sellers who would be able to use a single, centralized return instead of being required to file returns separately in each local jurisdiction in Louisiana.
• There is an important distinction in Louisiana between (1) the group of sellers/vendors who have statutory nexus with the State of Louisiana and are statutorily required to collect and remit Louisiana sales taxes because they meet the definition of a “dealer,” and (2) the smaller subgroup of those “dealers” (sellers with statutory nexus) who would also meet the separate definition of “remote seller” and would thus be allowed to utilize one centralized state and local sales tax return (instead of multiple local returns) for reporting purposes.
• The RSIB provides that a “remote seller” means “a seller who sells for sale at retail, use, consumption, distribution, or for storage to be used for consumption or distribution any taxable tangible personal property, products transferred electronically, or services for delivery within Louisiana but does not have physical presence in Louisiana.”  According to the RSIB, “[i]f a seller has physical presence in Louisiana, the seller is considered a dealer as defined by LA R.S. 47:301(4) and subject to state and local collection and remittance requirements.”
• The RSIB also includes two examples of “remote sellers.”  Based on the in-depth discussions at the Commission’s December 18, 2018 meeting, it is understood these examples are to be illustrative and not exhaustive.
• The first example (Example 1) provides that “Company A sells tangible personal property for delivery to purchasers in Louisiana through only remote means through its Internet website, catalogs, telephone, television shopping channel, or other communication systems … [and] Company A has no physical stores, inventory, or salespersons in Louisiana.”
• The second example (Example 2) provides:  “Company B sells tangible personal property for delivery to purchasers in Louisiana through only remote means through its Internet website, catalogs, telephone, television shopping channel, or other communication systems. Company B is an affiliate of Company C, but each company may sell different lines of products. Company C has retail stores located in Louisiana. An online purchase from Company B cannot be returned or exchanged in one of Company C’s stores in Louisiana. Company B is a remote seller but Company C is not a remote seller.”
• Also, importantly, following much discussion and public comment, the Commission voted that the final issued version of the RSIB would not include an additional previously-drafted example of what was “not a remote seller,” because that additional example (if kept) would have inadvertently had the effect of precluding certain classes of sellers/taxpayers with “affiliate nexus” in the State from using a single, central return (be it the current Direct Marketer Return or the Commission’s forthcoming centralized return when completed).  Specifically, the final example (now removed) would have in effect seemingly excluded from the definition of “remote seller” a seller that had a separate affiliate entity with retail stores in Louisiana if an online purchase from the seller can be returned at the separate affiliate entity’s retail store location for a refund, credit, or gift card.  Louisiana sales tax law – La. R.S. 47:302(V) – currently allows these exact types of sellers to file the single, centralized Direct Marketer Return.  Rather than being allowed to use the single Direct Marketer Return (allowed now) or the Commission’s forthcoming single return (when completed), these excluded sellers would have been required to file directly with the State and every local jurisdiction in which they make sales (up to 63 additional separate parish returns per month, or 750+ additional parish returns per year).  The Commission ultimately decided to remove this additional draft example of a “non-remote seller” because the Commission did not want to narrow the class of sellers that could use some form of centralized return more than what is even allowed under current Louisiana law.  The Commission also did not want to inadvertently add even more complexity and higher undue burdens from a Commerce Clause perspective (as cautioned against by the U.S. Supreme Court recently in Wayfair).  The Commission also did not seem to want to inadvertently provide a more expansive view of “physical presence” than is even provided for under the current Louisiana sales tax jurisprudence in the prior BarnesAndNoble.com case.  The Court in BarnesAndNoble.com expressly held that those activities noted in the final example (now removed) did not amount to “physical presence” in Louisiana.  Based on the Commission’s meeting discussions, the goal of the Commission’s efforts with the definition of “remote seller” in the RSIB was for the “remote seller” status to be determined on an individual entity basis, without adding in additional “affiliate nexus” concepts.  The Jones Walker SALT Team had provided public comments to the Commission regarding this specific issue.

Current Voluntary Nature of These Collection and Remittance Provisions

• The RSIB seeks to again clarify that the collection and remittance provisions in the RSIB are currently voluntary, and are not yet mandatory, as the implementing legislative Act – Act 5 of the 2018 Second Extraordinary Session – is not yet “applicable” and cannot be until additional legislative actions occur in the upcoming 2019 Regular Session of the Legislature.
• The RSIB anticipates that the collection and remittance provisions will become mandatory at “a date to be determined sometime in 2019.”
• Remote sellers can expect at least thirty days’ notice prior to the commencement of mandatory collection and remittance requirements.  Notice will be issued as provided by LA R.S. 47:302(W)(6) following further work of the Commission and the LDR.

Remote Sellers’ Collection and Remittance Requirements (and Information Reporting Requirements)

• The RSIB provides that a remote seller with the requisite “economic nexus” – gross revenue for sales delivered into Louisiana in excess of $100,000 from sales or separate transactions of 200 or more sold for delivery into Louisiana – should voluntarily apply to begin filing a Direct Marketer Return with the Louisiana Department of Revenue (the “LDR”).  Upon approval, the remote seller could immediately begin voluntary collection of sales tax on its remote sales for delivery within Louisiana.
• The Direct Marketer Return allows the seller to collect Louisiana state and local sales tax at a flat combined rate (currently 8.45%) and remit such tax on one, centralized monthly return.
• Any remote seller who does not meet these aforementioned “economic nexus” thresholds, but who has cumulative annual gross receipts in excess of $50,000 per calendar (including those gross receipts of its affiliates) year must comply with Louisiana separate DMA-style information reporting requirements in La. R.S. 47:309.1 as a “remote retailer.”  For purposes of calculating these gross receipts, the seller and its affiliates must include all receipts from retail sales of tangible personal property or taxable services where the property is delivered into Louisiana or the beneficial use of the service occurs in Louisiana. The RSIB directs sellers to LDR Revenue Information Bulletin 18-006 for more information.  If the seller chooses to voluntarily collect and remit on its sales for delivery into Louisiana, the seller is relieved from the reporting requirements of La. R.S. 47:309.1 beginning on the date of collection.  However, the portion of the calendar year preceding the date of collection would remain subject to the State’s information reporting requirements.

Calculation of Applicable Economic Nexus Thresholds

• The RSIB further explains the Commission’s understanding of the way in which a seller should calculate its sales and individual transactions when determining whether the seller has met the State’s “economic nexus” thresholds in La. R.S. 47:301(4)(m)(i) (i.e., (1) gross revenue for sales delivered into Louisiana in excess of $100,000 from sales, or (2) separate transactions of 200 or more sold for delivery into Louisiana).
• According to the RSIB, to calculate the amount and quantity of sales, remote sellers should consider sales during the current calendar year and the immediately preceding calendar year. For example, if a remote seller sold $120,000 of tangible personal property in 1,000 separate transactions for delivery into Louisiana during 2018, the remote seller should voluntarily collect and remit sales tax in 2019.

Timeline of Registration

• According to the RSIB, if a remote seller has not previously registered with the LDR, the remote seller should submit the Form R-1031A within thirty days of surpassing either of the “economic nexus” thresholds in La. R.S. 47:301(4)(m)(i).  Assuming the application is approved by LDR, the remote seller should commence collection of sales and use tax on sales for delivery into Louisiana no later than ninety days from the date the remote seller surpassed either of the thresholds of LA R.S. 47:301(4)(m)(i). If the application is not approved, the applicant should adhere to the instructions set forth in the notice from LDR.

A more detailed review and analysis regarding the Commission’s recent activities, discussions, and actions will be forthcoming in a separate blog post.

The Jones Walker SALT Team will also continue to closely follow – and report on – the future activities of the Commission and the Legislature (and any related developments) as they occur.