Good news for marketplace sellers! The state of Louisiana now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Walmart or Amazon.
This means that if you sell on a platform like Walmart, then Walmart will collect sales tax from your Louisiana buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to eCommerce sales tax.
This post will explain what online sellers need to know about the Louisiana marketplace facilitator law, and answer your frequently asked questions.
Quick Facts about the Louisiana Marketplace Facilitator Law
- Effective date: July 1, 2020
- Threshold: Marketplace facilitators that make more than $100,000 in gross sales into Louisiana or more than 200 sales into Louisiana in the prior or current calendar year are required to collect and remit sales tax on behalf of marketplace sellers.
- State law information: Read the full text of the Louisiana marketplace facilitator law.
- Marketplaces that have adopted this law:
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in Louisiana?
Louisiana Act 216 defines a Marketplace Facilitator as any person that facilitates a sale for a Marketplace Seller through a Marketplace, owned, operated, or otherwise controlled by the person, by any of the following:
- Offering for sale through any means, by a marketplace seller, tangible personal property, or sales of services for delivery into Louisiana.
- Collecting payment from the purchaser and transmitting all or part of the payment to the Marketplace Seller, regardless of whether the person receives compensation or other consideration in exchange for facilitating the sale or providing any other service directly or indirectly through any agreement or arrangement with one or more third parties
Does this mean I can stop collecting Louisiana sales tax?
It depends. Every business’s sales tax situation is unique to that business.
Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Louisiana.
Example #1: You only make sales on online marketplaces.
In this example, you only sell on Amazon and eBay. Because Amazon and eBay are both now collecting sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. (However, as a seller with nexus in the state, you will most likely still be required to file periodic sales tax returns. See “Does this mean I can cancel my Louisiana sales tax permit?” below.)
Example #2: You sell on online marketplaces and your own online store and/or brick and mortar store.
In this case, you’d still be required to collect sales tax from buyers who purchase from you through your own online store (for example, via your Ecwid or Magento store). And you would still be required to collect sales tax from your brick and mortar customers.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my Louisiana sales tax permit?
Louisiana’s marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. So if you live or otherwise have sales tax nexus in Louisiana, then you are still required to hold a Louisiana sales tax permit. This also means you are still required to file sales tax returns on due dates set for you by the state.
However, if you are registered to collect sales tax in Louisiana and only make marketplace sales in Louisiana, you may be able to cancel your sales tax permit.
But first, a word of caution. We recommend checking directly with the state or a sales tax expert before cancelling your sales tax registration. This is because your business is now on the state of Louisiana’s books and potentially on their radar should they decide that you still have sales tax obligations in the state of Louisiana.
Final note: It’s important to assess your business before making a decision about cancelling sales tax permits. Are you in a growth stage? Do you plan to expand and think you may have Louisiana sales tax collection requirements in the future? Then you may want to hang on to your Louisiana sales tax permit rather than cancelling it and going through the administrative hassle of registering again in the future. This business decision is up to you.
Do I still need to file a Louisiana sales tax return?
If you are registered to collect sales tax in Louisiana (i.e. you have an active Louisiana sales tax permit) then the state still requires that you file sales tax returns.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.)
If you no longer have any sales tax to remit to the state of Louisiana, we recommend checking directly with the state to determine if you can cancel your sales tax registration.
Be cautious here. If you are registered for a sales tax permit and do not file, the state can assess penalties even though you don’t have any sales tax to remit! We have, unfortunately, talked to too many sellers who have found this out the hard way when a tax penalty bill arrives.
What do I do with any Louisiana sales tax I have already collected?
If you have already collected Louisiana sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Let’s say you sell on Amazon and Louisiana requires you to file and remit sales tax quarterly. Though Amazon began collecting sales tax on your behalf on July 1, 2020, if you have any sales tax in your bank account that you collected from Q2 2020, you will still need to remit that to the Louisiana Department of Revenue or face a penalty.
Does TaxJar handle this for me?
TaxJar AutoFile handles Louisiana sales tax automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Louisiana wants it filed. For example, many states, Louisiana included, want sellers to break down their sales tax collected interstate (sales originating in Louisiana sent to another state) and intrastate (sales made from Louisiana to Louisiana.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your Louisiana sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports give you all the info you need to file manually
If you prefer to file manually, your TaxJar Reports also reflect what the Louisiana Department of Revenue wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on Louisiana sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Louisiana Sales Tax Guide for Businesses
Do you have questions or something to say about the Louisiana marketplace facilitator law? Start the conversation in the comments!