United States

Louisiana: Retailer/Marketplace required to Collect Local Tax on Marketplace Sales

Apr 02, 2018
From KPMG TaxWatch

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Recently, a Louisiana district court held that an online retailer that sold both its own products and the products of third-party retailers on an online marketplace it operated was required to collect and remit Jefferson Parish sales and use taxes on sales made to parish residents by third-party retailers through its marketplace. In its role as a marketplace, the taxpayer facilitated payment processing for the third-party retailers that sold goods through the taxpayer’s online marketplace. The taxpayer received a commission from each sale, which was a percentage of the sales price of the product and the shipping cost. The taxpayer collected local sales and use taxes on sales of its own products via the marketplace, but argued that it was not a “dealer” required to collect and remit with respect to the third-party transactions that arose from its marketplace. The district court disagreed, largely based on the fact that the taxpayer collected all proceeds from its marketplace transactions, and sellers making sales through the marketplace were required to use the marketplace’s checkout system. Notably, marketplace sellers could not collect any proceeds directly from customers for transactions made through the marketplace.  In the court’s view, this evidenced that the taxpayer owed Jefferson Parish the uncollected local taxes. The taxpayer has indicated it intends to appeal the decision. Please contact Randy Serpas at 504-569-8810 with questions on this decision.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.