Should you collect sales tax in Louisiana?
Sales tax is levied on retail sales to your customers, including leasing or renting tangible personal property. However, you will collect the sales tax if you determine the nexus in Louisiana. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office location in Louisiana. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds can be on revenue or some other transactional basis.
Let’s explore if your business has a Physical nexus in Louisiana.
A physical nexus is integrated when your business is engaged in the following in Louisiana:
- Servicing tangible personal property in Louisiana.
- Maintaining, occupying or using a place of business or an office in Louisiana.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name is called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Louisiana.
For more detailed instructions, refer to Louisiana sales tax FAQs (Pt. 3)
Constituting an Economic nexus in Louisiana?
You are required to comply with and register under sales tax rules if you are a remote seller (i.e., you don’t have a physical presence in the state) and your business sales in Louisiana exceed $100,000 or the number of transactions exceeds 200 during the current or previous calendar year.
You may also refer to the Louisiana Revenue Department advisory (pg. 2) to know more about business activities that may create an economic nexus within the state.
How can you Register for Sales tax in Louisiana?
To get a sales tax permit in the state, you can apply online through the Louisiana Taxpayer Access Point (LaTAP).
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners or owners.
- Address details (physical and mailing).
- Business incorporation dates in Louisiana.
- Contact information.
- Nature of business.
- NAICS code.
- Business locations.
Is your product or services liable to Sales tax in Louisiana?
Tangible Property: Sales tax in Louisiana is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services: Services are generally not chargeable to sales tax in Louisiana except otherwise stated. However, some services, such as utilities, telecom, amusement, and cleaning, etc. are chargeable to sales tax. For more information, click here.
Digital Product: Louisiana charges sales tax on digital products such as software, streaming services, e-books, etc. Please see the Louisiana Revenue Department advisory on digital transactions here.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. This is taxable in Louisiana. Visit this link for additional guidance.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, newspapers/ magazines, and manufacturing equipment. To see what exemptions are covered, please click here.
Click here for a sales tax guide issued by the Louisiana Department of Revenue, which provides detailed instructions on the taxability of products and services.
How should you collect and calculate state taxes in Louisiana?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not Louisiana-based. The sales tax is destination-based in Louisiana, which means you must collect taxes on tangible property sold to buyers based in Louisiana.
Complexities involved where you have a business nexus even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Louisiana has a base sales tax rate of 4.45%, followed by local tax rates that vary by city and municipality.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectable = Sale value * (4.45% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
If non-taxable items are sold, shipping charges associated with such a sale are not subject to sales tax. However, when a sale includes both taxable and non-taxable items, shipping charges need to be apportioned relatively between the taxable and non-taxable parts of the sale, and accordingly, sales tax is applicable to the taxable portion of the sale. Furthermore, it is worth noting that shipping charges are taxable when they are separately stated over the invoice. Refer here for the official guidance issued by the state.
How should you file sales tax in Louisiana?
E-file: You can file your return online through the Louisiana e-filing (LaTAP) portal. You also have the option to file sales tax through a third-party vendor OR develop your program.
Payment of sales tax is mandatory to be completed along with the return. Please note that EFT payment is required when sales tax payment exceeds $5,000. It is important to pay by the due date; otherwise, you may have to pay the interest.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the state assigns you a filing frequency, which can be Monthly or Quarterly. According to your filing frequency, the due date for filing sales tax would be the 20th day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official website of the Louisiana Revenue Department, where you can see what the state has to say about sales tax filing due dates.
Are there any fines or penalties for default in filing or paying sales tax?
If you fail to file or pay the sales tax within the due dates, the state levies a penalty of 5% of sales tax if you are 30 days late, which will be an additional 5% for each month after the first 30 days. The maximum penalty to be levied would be 25%. In addition to the penalty, an interest of 0.5% of each 30 days of default in payment of tax is charged, which shall not exceed 25%.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Go through the comprehensive guide to penalties and interest issues by the Louisiana Department of Revenue.
Sales tax holiday in Louisiana
Currently, the state still needs to notify the sales tax holiday for 2024. However, refer to the department’s advisory for detailed information on the sales tax holiday in 2023.