Sales Tax Slice: Online Retailers May be Filing Their First Louisiana SUT Returns April 20

Retailers not previously deemed to have nexus in the state may be required to file Louisiana sales and use tax returns beginning April 20, the due date for first-quarter and March returns. Under Louisiana legislation effective March 14, a retailer is now presumed to have nexus in the state if it enters into an agreement with a Louisiana resident or business under which the resident or business, for consideration, refers potential customers to the retailer. The referral may be made via a link on an Internet website, an in-person oral presentation, telemarketing, or otherwise. If the cumulative gross receipts from sales of tangible personal property to customers in Louisiana who are referred to the retailer through such an agreement exceeded $50,000 during the preceding twelve months, the presumption of nexus may be rebutted if the retailer can demonstrate that it cannot reasonably be expected to have gross receipts in excess of $50,000 for the succeeding twelve months.   

Former Gov. Bobby Jindal vetoed identical legislation last year. The new legislation passed last month as part of a package of measures aimed at reducing a budget shortfall of almost $1 billion.  

Underscoring the desperation of Louisiana’s revenue situation, as detailed in the below letter obtained by Bloomberg BNA, the state’s Department of Revenue recently directed vendors participating in the Ponchatoula Strawberry Festival to pay their sales and use tax on sales from the event in advance. Vendors who prefer to remit their sales and use tax on the normal due date are threatened with an estimated billing of $500 and penalties and interest being assessed to their account.

DOR Notice

In other nexus news, the Illinois Department of Revenue has proposed a regulation which would implement Illinois’ click-through nexus law. 

Illinois’ current click-through nexus statute was enacted after the Illinois Circuit Court struck down its previous statute as violating the Internet Tax Freedom Act’s prohibition against discriminatory taxes on electronic commerce. The former statute deemed out-of-state retailers to have nexus based only on referrals made over the Internet. The current statute corrects this by deeming out-of-state retailers to have nexus based on any referral arrangement with persons or companies located in the state. As under Louisiana’s statute, nexus-creating referrals may be made over the Internet or otherwise. 

The below timeline details the effective dates of click-through nexus provisions in states that have enacted them.

Click-through Nexus Timeline

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Will Congress fail to advance the Marketplace Fairness Act again this year? 

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