Louisiana Sales Tax Handbook

RATE OF SALES TAX:

4.45%

LOCAL & COUNTY MAXIMUM RATES:

7.00%

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Louisiana.

Traditional Products and Services

Physical goods, such as furniture, household appliances, and automobiles, is subject to sales tax in Louisiana.

Groceries, prescription medications, and fuel are all tax-free.

In Louisiana, several services are subject to sales tax. View this PDF from the Louisiana Department of Revenue website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Louisiana are required to collect sales tax on the sale of digital items.

How to Register for Sales Tax in Louisiana

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

Personal identifying information (SSN, address, etc.)
Identification information for a business (EIN, address, etc.)
A description of your company
All firms must have a North American Industrial Classification System (NAICS) designation. You may do an NAICS Code Lookup to locate the NAICS Code for LLC that corresponds to your industry.

Even if you don’t have any sales tax to report or pay, Louisiana mandates that every seller with a sales tax permit submit a sales tax return on the due date.

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Retail Sales

For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.

Here’s an illustration of how this situation may look:

In Lafayette, Louisiana, Mary owns and operates a bookshop. Because books are taxable in the state of Louisiana, Mary charges a 9% flat-rate sales tax on all purchases. This includes the 5% state sales tax in Louisiana as well as the 4% local sales tax in Lafayette.

Sales inside the state

The state of Louisiana has a policy known as a destination-based sales tax. This implies that long-distance transactions inside Louisiana are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.

Consider the following scenario:

Steve operates his own eBay electronics company from his home in New Orleans, Louisiana. A buyer from Shreveport discovers Steve’s eBay website and buys a $350 set of headphones. Steve calculates the sales tax for this transaction using Louisiana’s 5% state tax rate plus Shreveport’s municipal tax rate of 4.6%. The entire cost is $383.60 ($33.60 sales tax) at a total sales tax rate of 9.6%.

Out-of-State Purchases

Businesses in Louisiana must only pay sales tax on out-of-state sales if they have nexus in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Louisiana seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Louisiana are required to file sales tax returns and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

Quarterly filing: If your company receives less than $500 in sales tax every month, you should submit returns on a quarterly basis.
Monthly filing: If your company receives more than $500 in sales tax every month, you must submit returns on a monthly basis.

Deadlines for Filing

The deadline for all Louisiana sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is moved to the next business day.

Penalties for Filing Late

Louisiana assesses a late filing penalty of 5% every month or partial month, with a maximum penalty of 25% of the tax stated on the tax return.

If the return has previously been submitted but not paid in full, Louisiana imposes a late payment penalty of 0.5% per month up to 25% of the outstanding tax.

The state assesses any unpaid tax or penalty with a compounded interest rate of 4.5% per year or 0.35% per month or partial month.