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Normand v. Wal-Mart.Com USA, LLC

Court of Appeals of Louisiana, Fifth Circuit

December 27, 2018

NEWELL NORMAND, SHERIFF & EX-OFFICIO TAX COLLECTOR FOR THE PARISH OF JEFFERSON
v.
WAL-MART.COM USA, LLC

          ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 769-149, DIVISION "N" HONORABLE STEPHEN D. ENRIGHT, JR., JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLEE, JOSEPH P. LOPINTO, III, SHERIFF AND EX-OFFICIO TAX COLLECTOR FOR THE PARISH OF JEFFERSON (SUCCESSOR IN OFFICE TO SHERIFF NEWELL NORMAND) Kenneth C. Fonte.

          COUNSEL FOR DEFENDANT/APPELLANT, WAL-MART.COM USA, LLC Jeffrey A. Friedman, Charles C. Kearns, Martin E. Landrieu.

          Panel composed of Judges Susan M. Chehardy, Marc E. Johnson, and John J. Molaison, Jr.

          MARC E. JOHNSON JUDGE.

         In this tax collection case, Defendant, Wal-Mart.com USA, LLC ("Walmart.com"), appeals the trial court's judgment finding it liable for sales tax on transactions involving third-party retailers on its online marketplace. For the following reasons, we affirm the judgment of the trial court.

         FACTS & PROCEDURAL HISTORY

         The facts of this case are undisputed. Walmart.com operates an online marketplace ("the Marketplace") where it, along with third-party retailers, sell their goods. Specifically, Walmart.com sells inventory it owns on the website and facilitates the sales of goods owned by third-party retailers who list their goods for sale on the Marketplace. Visitors to the Walmart.com website have the opportunity to buy goods from Walmart.com or the third-party retailers.

         In order to sell their goods on the Marketplace, the third-party retailers must enter into a contract with Walmart.com. This contract, the Marketplace Retailer Agreement ("the Agreement"), provides that the third-party retailer will be the seller of record. It further requires that the third-party retailer provide certain information for each product sold, including the product name, a description of the product, an image, the price, and the product tax code.

         Under the contract, customers of the Walmart.com website place orders for the third-party retailer's goods using the Walmart.com checkout system, and Walmart.com collects all of the proceeds from such transactions. Thereafter, Walmart.com electronically transmits the order information, including the customer's name, email address and shipping address, to the third-party retailer who is solely responsible for fulfillment of the order, including packaging and shipping the goods to the customer. The third-party retailer is also responsible for customer service, including all cancellations, returns and refunds. Further, items purchased from the third-party retailer cannot be picked up at or returned to a physical Wal-Mart store. In exchange for allowing third-party retailers to sell their goods on the Marketplace, Walmart.com receives compensation from the third-party retailers in the form of a referral fee percentage, which is set forth in the Agreement, for each product sold by the third-party retailer on the Marketplace.

         The Agreement further sets forth the tax policies applicable to the third-party retailers. It specifically provides that the third-party retailer is solely liable for any tax liabilities, including sales and use taxes. The Agreement offers an option to the third-party retailer for Walmart.com to collect the applicable taxes on its behalf, but the third-party retailer is responsible for remitting the taxes to the proper government agencies.

         For each year from 2009 through 2015, Walmart.com filed its Jefferson Parish Quarterly Sales and Use Tax Returns, in which it reported all sales made by Walmart.com to customers in Jefferson Parish and remitted the required sales tax. It did not report or remit sales tax for those sales made by the third-party retailers on its Marketplace. Plaintiff, Newell Normand, Sheriff and Ex-Officio Tax Collector for the Parish of Jefferson, through his successor in office Sheriff Joseph P. Lopinto, III ("the Tax Collector"), subsequently conducted an audit of Walmart.com for the period of January 1, 2009 through December 31, 2015. As a result of the audit, the Tax Collector determined that additional sales taxes were owed by Walmart.com for sales involving the third-party retailers on the Marketplace.

         On February 16, 2017, the Tax Collector filed a Rule for Taxes alleging Walmart.com failed to collect and remit local sales taxes from its customers for certain Jefferson Parish retail sales transactions - specifically those sales transactions involving third party retailers. Relying on the audit report, the Tax Collector sought unpaid sales taxes in the amount of $1, 896, 882.15, along with interests, penalties, audit fees, and attorney fees. After a three-day trial over a period of three months, the trial court rendered judgment on March 2, 2018, in favor of the Tax Collector for the uncollected taxes involving sales of third-party retailers in the amount of $137, 944.25, plus interest and attorney fees. The trial court issued reasons for judgment explaining that the obligation to collect and remit local sales and use taxes is imposed on a "dealer" and that the statutory definition of "dealer" is not limited to a retail seller. The trial court determined that Walmart.com was a ...


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