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Education

Broad implications of base, cable, optic, microwave, or
other communication system.
Walmart Louisiana Tax Case This sweeping definition of "dealer"
has major implications to multiple
By Frank Dennaoui third parties involved in transactions.
This is the first ruling to hold an
Global Legal Law Firm online marketplace liable for tax
on third-party sales. The court's
ecently, the Fifth Circuit Court of Appeal in Louisiana unanimously reasoning could extend beyond
affirmed a trial court ruling that Walmart.com is liable for sales tax marketplaces and impact all sorts of
on transactions made by third-party sellers hosted by its online intermediaries.
R marketplace. (Normand v. Wal-Mart.com USA, LLC, No. 18-CA-211
(La. 5 Cir., Dec. 27, 2018)). The Court used a broad interpretation to hold that The most obvious threat for now is
Walmart.com could be classified as a "dealer" for purposes of third-party sales to online marketplace owners who
on its marketplace and is responsible for collecting sales tax. facilitate checkout and payment
processing for their third-party
The sole issue the court considered was whether the trial court correctly ruled sellers. If other jurisdictions take
that Walmart.com could be liable for taxes as a dealer under Louisiana law. The similar views, online marketplaces
Louisiana statutes state that sales tax is to be collected by the dealer from the could be subject to wide-reaching tax
consumer. La. Rev. Stat. Sec. 47:301(4) defines "dealer" as: implications and liability for third-
party sellers across Louisiana and
Every person who engages in regular or systematic solicitation of a potentially into other states.
consumer market in the taxing jurisdiction by the distribution of catalogs,
periodicals, advertising fliers, or other advertising, or by means of print, Processors, other
radio or television media, by mail, telegraphy, telephone, computer data third parties affected

In making this decision, the court
relied on antiquated sales tax laws
that never contemplated the existence
of new technology such as electronic
marketplace facilitators like Walmart.
com. Yet the court broadly interpreted
these laws to hold that a third-party
non-seller can be liable for the seller's
tax obligations.

The court's reasoning could affect
other third parties tangentially
related to a sale in Louisiana's Fifth
Circuit. The court focused heavily
on Walmart.com's role as a payment
processor as a key factor for holding
Walmart.com responsible. The
court focused on factors including:
Walmart.com facilitating payment
processing; Walmart.com accepting
risk for fraudulent transactions; third-
party marketplace sellers utilizing
Walmart.com's checkout system; and
Walmart.com collecting payments
from transactions before they are
redirected to sellers.

Typically, third parties to sales
aren't liable for the seller's tax
obligations. Imposing a sales tax
collection obligation on third parties
who aren't sellers would be highly
problematic for any third party
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