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

• Author: Claire E. Schnell
• Position: J.D./D.C.L. Candidate 2020, Paul M. Hebert Law Center, Louisiana State University
• Pages: 249-286

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

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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.

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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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