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NEW ORLEANS (Legal Newsline) – The Arizona-based jewelry company that challenged how Louisiana collects sales tax from online purchases is appealing its loss.
Halstead Bead filed its notice of appeal on June 21 and will be asking the U.S. Court of Appeals for the Fifth Circuit to reverse a May 23 ruling from a New Orleans federal judge. The company is represented by the Pelican Institute for Public Policy, the Goldwater Institute and the National Taxpayers Union Foundation.
Judge Jane Triche Milazzo tossed the case filed last year by Halstead Bead, a family-owned business specializing in jewelry-making supplies that it sells to wholesalers and retail customers. It challenged the state’s requirement that each of its 64 parishes collect sales and use taxes, with each parish setting its own tax rates and categories.
The case alleged violation of the Dormant Commerce Clause and the Due Process Clause.
Milazzo declared her court did not have jurisdiction over the case but even if it did, she would have abstained in the interest of allowing states to figure out their own tax systems.
“Plaintiff seeks to review Louisiana’s tax scheme, over which the state enjoys wide regulatory latitude,” the decision says. “Plaintiff’s alleged constitutional violations do not require heightened judicial scrutiny. Plaintiff does not, however, appear to seek a competitive position in this lawsuit.”
Milazzo first wrote the Tax Injunction Act prevented the federal court from asserting jurisdiction over the dispute because there is a more efficient venue in state court.
“The TIA divests federal district courts of jurisdiction over cases that seek to restrain the collection of state or local taxes when state law provides an adequate remedy,” Milazzo wrote.
“Here, Plaintiff would have this Court restrain the collection of sales and use taxes from remote sellers. Louisiana law provides an adequate remedy in the form of an action for a declaratory judgment.”