In a high-profile case that has captured national attention, the Louisiana Supreme Court found that Wal-Mart.com is not responsible as a “dealer” for the collection of local sales tax on goods that third-party vendors sold on Wal-Mart.com’s online marketplace. The case is the first in the country in which a state’s highest court has ruled on sales tax obligations applicable to an online marketplace, or “marketplace facilitator,” such as Wal-Mart.com.

In a well-reasoned opinion authored by Justice John Weimer, the Court correctly held that “[b]ecause an online marketplace is not a “dealer” … for sales made by third-party retailers through its website and because the online marketplace did not contractually assume the statutory obligation of the actual dealers, that is, the third party retailers, the judgment of the trial court and the decision of the court of appeal [both holding Wal-Mart.com responsible for the taxes] are reversed and vacated.”

The Court expressly recognized that Wal-Mart.com never had title or possession of the property being sold by third-party retailers and did not transfer title or possession of the property to purchasers. Thus, Wal-Mart.com was not the “seller” but rather a facilitator of the sale. Ultimately, the Court concluded that absent specific legislation requiring an online marketplace to collect sales taxes on third-party sales, companies like Wal-Mart.com are not legally obligated to do so. Double taxation could result if both online marketplaces and third-party retailers are obligated to collect sales tax on the same transactions.

The Court made clear that there is only one “dealer” required to collect sales tax from the purchaser, and in the context of a retail sale, “the dealer” is the seller – the person or entity that transfers title or possession of the product. In this instance, the seller is the third party retailer, and Wal-Mart.com is merely a facilitator of the sale.

Firm attorney Martin Landrieu, who co-chaired the trial and appellate proceedings with Jeff Friedman at Eversheds-Sutherland stated, “This is a very significant case that has been closely watched by large and small retailers and industry groups across the country, as well as local and state tax collectors. The Louisiana Supreme Court got it right, recognizing that as we delve further into the age of internet transactions and marketplace sales, state legislators are tasked with updating the tax laws in a fair and consistent manner. We have seen the start of this legislative movement in the wake of the US Supreme Court’s decision in the 2018 Wayfair case.”

See Normand v. Wal-Mart.com USA, LLC, 2019-263

Attorneys Martin Landrieu and Phil Antis, in conjunction with their colleagues at Eversheds-Sutherland, Jeff Friedman, Charlie Kearns and Michael Kerman, led the firm’s efforts in the successful defense of Wal-Mart.com