Don’t Look Back: What the Louisiana Walmart.com Ruling Shows

  • January 31, 2020

Clear marketplace facilitator regulations are the only path to compliance.

Normand v. Wal-Mart.com's Implications for the Online Marketplace

Walmart’s recent win in the Louisiana Supreme Court further highlights how important it is for state and local jurisdictions to set up clear guidance for market facilitator laws instead of looking back and trying to collect pre-Wayfair taxes.

The court, in its 4–3 decision in Normand v. Wal-Mart.com, overturned two lower court rulings and found that Walmart wasn’t liable for collecting taxes from third-party sellers in Jefferson Parish using the company’s online marketplace

The case originated with the parish’s audit of Walmart.com for 2009 through 2015, well before the Wayfair ruling. That makes this another example of a government administration focusing on the past instead of the future to close the revenue gap. We’re seeing this in California and South Carolina as well.

Retroactive Tax Liabilities: A Fundamental Violation of Fairness

The Wayfair ruling was supposed to be a prospective, future-looking tax, and the recent attempts by states to collect back taxes from a time when the law didn’t even exist is a fundamental violation of fairness. Retailers would have to absorb the cost of recalculating taxes, and notifying customers would be a nightmare. In fact, in an amicus brief filed during the Wayfair case, 40 states promised not to impose retroactive tax liabilities on companies.

What should states, counties and other local jurisdictions be doing instead of trying to boost revenue through retroactivity? Make it easier for companies to comply moving forward as we navigate the post-Wayfair tax landscape. 

By taking the long view and setting up clear, simple-to-understand regulations governing remote seller and marketplace facilitators, tax jurisdictions will be able to collect the revenue they desire without resorting to litigation.

What the Future Holds

In fact, many states have already started doing this. More than 30 have already set up marketplace facilitator framework. There’s still a lot of work to be done during the 2020 state legislative sessions to make these laws clear and compliance easy, but for jurisdictions waffling between looking to the future and looking back, the choice is clear.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.


About this Contributor

Michael J. Bernard Headshot
Michael J. Bernard
Chief Tax Officer, Transaction Tax

Michael Bernard is the Chief Tax Officer of Transaction Tax. In his role, he provides insight and thought leadership around tax department operations, U.S. indirect tax, tax risk management, and tax policy, as well as emerging tax trends. He is an executive-level tax attorney with a diverse portfolio of experience in corporate tax, administration, and finance, including a substantive knowledge of U.S. and international tax laws.

Prior to joining Vertex, Michael was in various tax leadership roles at Microsoft Corporation for 28 years, the most recent being Senior Director – Tax Counsel. Michael led teams in the following functional areas: direct and indirect tax controversy, sales and use, business license, property, tax IT, SOX, and telecommunications. He also co-led a corporate taxpayer advocacy group with the Washington Department of Revenue and was a Director on the Board of the Washington Research Council. Michael has also testified before administrative and lawmakers at both the federal and state level.

Michael earned both a J.D. and a Bachelor of Science in Business Administration from Creighton University. He is a part-time lecturer of Law in the LLM program at the University of Washington School of Law. Michael also served on the board of directors, executive committee, and chaired committees for The Tax Executives Institute (TEI) for nearly 25 years.

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