There Must Be a Better Way: Analyzing Louisiana's Sales Tax System in the Wake of South Dakota v. Wayfair, Inc.

AuthorClaire E. Schnell
PositionJ.D./D.C.L. Candidate 2020, Paul M. Hebert Law Center, Louisiana State University
Pages249-286
Louisiana Law Review Louisiana Law Review
Volume 80
Number 1
Fall 2019
Article 13
3-3-2020
There Must Be a Better Way: Analyzing Louisiana’s Sales There Must Be a Better Way: Analyzing Louisiana’s Sales
TaxSystem in the Wake of South Dakota v. Wayfair, Inc. TaxSystem in the Wake of South Dakota v. Wayfair, Inc.
Claire E. Schnell
Follow this and additional works at: https://digitalcommons.law.lsu.edu/lalrev
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Repository Citation Repository Citation
Claire E. Schnell,
There Must Be a Better Way: Analyzing Louisiana’s Sales TaxSystem in the Wake of
South Dakota v. Wayfair, Inc.
, 80 La. L. Rev. (2020)
Available at: https://digitalcommons.law.lsu.edu/lalrev/vol80/iss1/13
This Comment is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital
Commons. It has been accepted for inclusion in Louisiana Law Review by an authorized editor of LSU Law Digital
Commons. For more information, please contact kreed25@lsu.edu.
There Must Be a Better Way: Analyzing Louisiana’s
Sales Tax System in the Wake of South Dakota v.
Wayfair, Inc.
Claire E. Schnell*
TABLE OF CONTENTS
Introduction .................................................................................. 248
I. Origins of the Physical Presence Requirement ............................ 251
A. Why “Use Taxes”? ................................................................ 251
B. History of the Physical Presence Requirement ...................... 252
1. National Bellas Hess v. Department of Revenue
of Illinois: The Seminal Case on the Physical
Presence Requirement ..................................................... 253
2. Complete Auto Transit, Inc. v. Brady:
Introduction of “Substantial Nexus” ............................... 254
3. Quill Corp. v. North Dakota: The Physical
Presence Requirement Lives on in the Digital Age ........ 254
4. Congressional Inaction in the Wake of Quill .................. 255
5. Direct Marketing Concurrence: Tides Turning
on the Physical Presence Requirement ............................ 256
C. South Dakota v. Wayfair, Inc.: The Answer to
Justice Kennedy’s Call .......................................................... 257
1. Procedural History: The Road to the End of
the Physical Presence Requirement ................................. 257
2. The Physical Presence Requirement Overturned ............ 258
3. The Wayfair Guidelines: South Dakota’s System ........... 259
a. A Minimum Economic Nexus Threshold
Protection for Small Businesses ............................... 259
b. Retroactive Collection Ban:
A Fairness Consideration .......................................... 260
c. SSUTA Membership: Preventing Undue
Burdens on Interstate Commerce .............................. 260
Copyright 2019, by CLAIRE E. SCHNELL.
* J.D./D.C.L. Candidate 2020, Paul M. Hebert Law Center, Louisiana State
University. I would like to thank my parents for their unending love and support
in every endeavor I undertake, including this paper. I would al so like to thank
Matthew Juneau for introducing me to this paper’s important topic. Finally, I
would like to thank Professor John Devlin and the Volume 79 Board of Editors
for their guidance throughout the writing process.
337366-LSU_80-1_Text.indd 253 11/27/19 9:29 AM
248 LOUISIANA LAW REVIEW [Vol. 80
4. Introduction to the Streamlined Sales and Use Tax
Agreement and Its Importance Post-Wayfair .................. 261
II. Wayfair’s Impact on State Revenues............................................ 262
A. Tax System Requirements: How to Make Sure State
Sales Tax Systems Stand Up to Challenges of
Undue Burdens on Interstate Commerce ............................... 263
1. Differing Approaches Among the States......................... 263
a. Way to Go: Wayfair-Approved States ...................... 264
b. Still a Long Way to Go: States
Needing Improvement .............................................. 265
i. States That Are Already SSUTA Members ........ 265
ii. States That Are Non-SSUTA Members ............. 266
iii. States with Complex, Duplicative
Tax Collection Systems ...................................... 267
III. Louisiana’s Sales Tax System: Not Up to Par in a
Post-Wayfair World...................................................................... 268
A. Overarching Problems with Louisiana’s Current
Sales Tax System ................................................................... 268
B. Louisiana’s Attempt to Adapt Its Tax System
to Comply with Wayfair ........................................................ 269
IV. Looking to the Future: There Must Be a Better Way ................... 274
A. The Ideal Solution: Congressional Standardization
of the Nexus Requirement ..................................................... 275
B. Louisiana’s Options for E-Commerce
Sales Tax Collection .............................................................. 277
1. The Moderate Approach: The Louisiana
Sales and Use Tax Commission for
Remote Sellers’ Plan ....................................................... 277
2. The Total Reform Approach: Become a
SSUTA Member .............................................................. 280
Conclusion .................................................................................... 283
INTRODUCTION
Consider the story of L. Dennis Kozlowski, a former chief executive
of Tyco International charged with tax evasion of more than $1 million of
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