How does Louisiana go about collecting sales tax? When should you worry about it and when is it ok to ignore? If these questions are bothering you, we want to provide the answers! Here’s a quick guide to cover all the basics of sales tax in Louisiana.
You’re a merchant living anywhere but Louisiana
Did you sell an item to someone in the state of Louisiana but your business itself has no sales tax nexus in that state? Congrats, you don’t have to worry about sales tax and can go about your day.
You live and/or operate your business in Louisiana
In this scenario your business either exists in Louisiana or otherwise has physical presence there. You must collect sales tax on sales within the state. Louisiana is a destination-based sales tax state which means you’re concerned only where the customer exists, not where your business is located.
So let’s say your business is located in Baton Rouge and you sell to a customer in Lafayette. You’re only concerned with the rate in Lafayette and not Baton Rouge since that is where the customer lives.
The state rate in Louisiana is 5%. However, each county (called “parishes” in Louisiana) has its own additions, which often more than doubles that rate. You can find each individual city in the Louisiana City to Parish Index.
You live-out-of-state but have inventory in Louisiana
Here we have a scenario where your business exists outside of the state but you otherwise have sales tax nexus. Perhaps you have an employee or office in Louisiana, or you house inventory in the state. In this case you have to collect sales tax. Again, the rate you should charge customers depends on where your customer lives rather than where your business presence exists.
What constitutes nexus in Louisiana? Check out the definition from the Louisiana Department of Revenue website:
A seller or lessor will qualify as a dealer subject to tax collection requirements if they lease, rent, or sell tangible personal property in the state, furnish services in the state that are taxable under the statute, hold property in the state for resale, maintain a business location in the state, operate in the state through full-time or part-time resident or nonresident salesmen or agents, maintain an inventory in the state of tangible personal property for lease or rental, or deliver in a vehicle owned or operated by the seller.
As mentioned above, the state rate for Louisiana is 5%, but most counties (parishes) have their own additions. Make sure to consult the City to Parish Index for full rates.
Filing sales tax in Louisiana
If you must collect sales tax in Louisiana, you must first register your business for a Louisiana sales tax permit. You can do this online for free at the Department of Revenue Business ID Number Application page.
As for how to pay, if you owe more than $5000 you MUST pay online at the Louisiana TaxPayer Access Point. However, you can also grab the proper forms on the DOR website. You’ll be assigned to pay file a sales tax return either monthly or quarterly. Both options are due on the 20th of the month following the period in which they’re collected for.
Sales tax on shipping
Louisiana does not require sellers to charge sales tax on shipping costs.
Summary: Louisiana is a straightforward destination-based state with many local rates
Louisiana is a destination-based state, which means you charge sales tax based on the rate where the customer lives. If they live in Monroe, you only collect sales tax based on the Monroe rate. However, if you don’t have nexus and your business exists outside the state, you shouldn’t have to collect anything at all. The base rate is 5% but individual parishes (same as counties) add on additional taxes.
You must register before you can collect and remit payment to the state. It’s easy enough to do online, but you can also grab the proper forms on the DOR website. You will pay either monthly or quarterly, on the 20th following the taxable period.
Do you have questions about collecting or remitting sales tax in Louisiana? Start the conversation in the comments.