Nestled in the heart of the Deep South, Louisiana is more than just Mardi Gras and gumbo. It’s a buzzing crossroads of culture, business, and some of the friendliest folks you’ll meet. But let’s talk turkey: If you’re diving into the biz world here, you gotta wrap your head around our sales tax. Sure, it might seem as twisty as the Mississippi River, but don’t fret.
This guide breaks down everything you need to know about Louisiana’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Louisiana’s sales tax with confidence and ease.
Sales Tax Nexus in Louisiana
When a business creates either a physical or economic nexus, it is required to collect sales tax in Louisiana.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Louisiana include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus or Click-through Nexus: You could trigger a physical nexus if you have affiliates, whether they operate online or in person.
- Presence at Trade Show: In Louisiana, vendors at trade shows and other special events must collect and remit sales tax, overseen by the Department of Revenue, to support state and local services. Promoters and local authorities coordinate to ensure compliance and economic benefit.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Beginning August 1, 2023, the threshold for economic nexus in Louisiana is $100,000 in gross revenue in the previous or current calendar year’s sales. This marks a change from the 2020 criterion, which included a threshold of 200 transactions.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for physical and economic nexus requirements in Louisiana.
Louisiana Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Louisiana.
Tangible Products
Almost all goods are taxable in Louisiana, including:
- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Home Goods
The goods that are exempt from sales tax are:
- Groceries – Sales tax must be paid on all prepared food sales in Louisiana. However, food and drinks bought for cooking and eating at home are not taxed. This includes items like bakery products, fresh fruits and vegetables, and foods that need more cooking or preparation at home.
- Feminine Hygiene Products (i.e. pads, tampons, sanitary napkins, panty liners, menstrual sponges, and menstrual cups) and Diapers (i.e., special diapers or undergarments designed for adults who can’t control their bladder or bowel movements and also for children who are not yet potty trained.
- Prescription Medications and Medical Devices
- Farm Equipment: Farm equipment like tractors, harvesters, balers, and their attachments, as well as tools like clippers and plows, and irrigation equipment, are tax-exempt. This includes all parts that attach to a tractor.
Services
In Louisiana, the majority of or all service-based transactions, such as professional services, advertising, and employment services, are not subject to sales tax.
However, there are specific situations where certain services are taxable. For instance, taxable services are:
- Coating, wrapping, and galvanizing pipe and other property
- Laundry, cleaning, pressing, and dyeing services
- Repairs to autos, appliances, equipment, and other property
- Storage space for clothing, furs, and rugs
- Vehicle storage and parking
- Cold storage space
- Hotel occupancy
- Printing services
- Telecommunications services
- Other sales of services as defined in the statutes under R.S. 47:301(14) , like sales of admission or the furnishing of access to amusement, entertainment, recreational or athletic facilities or events.
Software-As-A-Service (SaaS)/Digital Products
Saas is
not taxable in the state of Louisiana.
Digital products (i.e., ebooks, downloadable video content, mobile apps) are
taxable. Transactions where the customer pays a fee to use a website or software without owning it are not subject to sales tax.
Shipping/Handling
Shipping and handling charges in the state of Louisiana are not taxable if:
- delivery happens after the sale and
- shipping charges are stated separately
Sales Tax Permits and Licenses in Louisiana
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Louisiana, the next important step is getting your Louisiana Seller’s Permit, also known as a sales tax permit.
Seller’s Permit
You can register for a Louisiana sales tax permit online at Louisana’s Department of Revenue’s site, geauxBiz.
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
- NAICS code
Registration fee
There is no fee to register for a sales tax permit.
Renewal
In Louisiana, you don’t have to renew your sales tax permit.
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them, as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In Louisiana, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
You can fill out the Louisiana Resale Certificate form provided by the Louisiana Department of Revenue after you receive your sales tax permit. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The
Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. However, Louisiana is not a party to this program, meaning it does not follow the uniform rules and definitions established by SST but has its own sales tax regulations.
Check with the Louisiana Department of Revenue for the most current information on Louisiana’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in Louisiana
Sales Tax Computation
In Louisiana, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Use TaxHero’s Louisiana Sales Tax Calculator to compute for sales tax.
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Louisiana and sells to a customer in New Orleans, LA, with a ZIP code of 70130. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
Louisiana |
4.45% |
| County: |
Orleans |
1.00% |
| District: |
2nd District |
0.00% |
| City: |
New Orleans |
5.00% |
| Combined Sales Tax Rate = |
9.45% |
|
Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax.
Louisiana is destination-based, meaning sales tax is determined based on the seller’s location. That means for a Louisiana-based seller, sales tax is generally based on the location of the seller when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Georgia to a customer in New Orleans, Louisiana, where you have nexus, you’d apply New Orleans’ sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in Louisiana
The next step after collection is filing and remitting your Louisiana sales tax returns. Filing and remittance can vary in frequency, typically monthly or quarterly.
It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with Louisiana sales tax regulations.
Due Dates
In Louisiana, the due date falls on the 20th day of the following month. For instance, sales tax collected in January is due by February 20th for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 20th deadline falls on a holiday or weekend, you’ll have until May 21st, the following business day, to submit.
Filing Sales Tax Returns
To file your sales tax return for Louisiana, a few options are available:
- File online through the Louisiana Taxpayer Access Point.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Starting from August 1, 2020, Louisiana offers a discount for filing sales tax on time. The discount rate is now 1.05% of the total sales and use taxes owed, increased from the earlier rate of 0.935%. However, this discount is capped at $1,500 each month.
Sales Tax Holiday
Currently, for 2024, the planned sales tax holidays in Louisiana is:
- September 6-8, 2024 (Second Ammendment Weekend Holiday): Purchases of firearms, ammunition, and hunting supplies are exempt from sales tax.
Louisiana Sales Tax Penalties
Like in most states, sales tax is a big part of how Louisiana generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in Louisiana:
- If a tax return is filed late, a penalty of 5% of the taxes owed is added every 30 days, up to a maximum of 25%.
- Additional penalties for negligence or not following rules can apply, and there may be extra fees if the tax department has to send a billing notice due to late or missing filings.
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