Whether your business is based in Louisiana or you just sell to customers who live there, it’s important to understand the state’s sales tax laws to ensure you’re fully compliant. Whether you need to collect sales tax in Louisiana will depend on a number of factors including the type of product or service that you sell and how significant of a physical presence you have in the state.
The state sales tax rate for Louisiana is 5%, with 4.97% of that being a straight sales tax and 0.03% designated as the Louisiana tourism promotion district sales tax. Localities are permitted to impose their own sales tax as well, and so in some places, the combined effective rate can be as high as 11.625%. This chart contains a listing of sales tax rate by city in Louisiana, with breakdowns for Parish, City and State rates available by viewing a city in detail.
A different state rate applies to certain items sold or rented in Louisiana as well. For instance, the rental of automobiles for less than 29 days is taxed at a rate of 3%, with 2.5% going towards state sales tax and 0.5% allocated as a local sales tax. The New Orleans Exhibition Hall Authority tax is another example of a specialized kind of sales tax that applies only to food service establishments serving food in Orleans Parish or at the New Orleans International Airport. It must be collected at a rate of 0.5% or 0.75% based on total revenue of the business from the previous year, and it’s added on to the total sales tax rate for the region.
Of course, you only need to collect sales tax in Louisiana if you have a significant presence, or nexus, there. This is true of most states, although the precise definition of a nexus can vary from one state to another. In Louisiana, you are considered to have a nexus if you:
In many states, using Amazon fulfillment services to deliver your goods creates a nexus for you if your product is stored in a warehouse in that state, but Louisiana does not currently have any Amazon fulfillment centers.
If you do have a nexus, the rate at which you will collect from your customers depends on the destination location of the product. If you have a physical store, you will charge the rate applicable at that location. If you’re shipping product to customers in Louisiana, however, you will have to collect at the rate in effect at the delivery address.
If you do have a nexus in Louisiana, you next need to determine if what you’re selling is taxable. Most sales of tangible personal property are taxable in Louisiana, as are a number of services. These services include furnishing of:
Medications and groceries are exempt from sales tax in Louisiana, and this includes all foods and beverages that are intended to be prepared and consumed in the home. However, some prepared meals are exempt from sales tax if they are furnished to patients, inmates, students, or staff of educational, religious, medical, or mental institutions.
Louisiana has several sales tax holidays throughout the year that you’ll also need to be aware of if you make taxable sales within the state. Two of these are for specific items, and one is a general sales tax holiday that applies to nearly all taxable purchases during the specified time period.
This Annual Sales Tax Holiday occurs on the first consecutive Friday and Saturday in August. It eliminates the sales tax completely on the first $2,500 of the purchase of almost all tangible personal property. There are a few exceptions to this, including leases and rentals, as well as most taxable services.
The Hurricane Preparedness Sales Tax Holiday occurs on the last Saturday and Sunday in May, and it applies to the first $1,500 of the sales price of qualifying items, including:
On the first Friday through Sunday in September, the Second Amendment Sales Tax Holiday eliminates the sales tax on qualifying purchases of the following:
This provision does not apply to hunting dogs and similar animals, toy guns, or firearms not specifically listed by the Louisiana Department of Revenue.
In order to collect and remit sales tax in Louisiana, you need to register with the state and obtain a sales tax certificate. This can be done online through the Louisiana Department of Revenue website, and there is no registration fee. You will need to obtain a federal Employer Identification Number (EIN) in order to register, and you should complete your registration process prior to making any taxable sales.
When you register, the Department of Revenue will assign you a filing frequency, which is based on the volume of taxable sales you expect to make. In general, smaller businesses will have to file sales tax returns quarterly, while larger, higher-volume businesses will be required to file and pay monthly.
If you file and pay your Louisiana state sales tax returns quarterly, they will be due on the 20th of the month following the close of the reporting period, as outlined below.
|January – March (Q1)||April 20th|
|April – June (Q2)||July 20th|
|July – September (Q3)||October 20th|
|October – December (Q4)||January 20th|
When filing monthly, your returns and payments will be due on the 20th of the following month.
For instances in which a due date falls on a weekend or a holiday, returns and payments will be due on the next business day.
Failure to file and pay your Louisiana state sales taxes on time once you’ve received your sales tax certificate from the state will incur a penalty of 5% of the tax due for each month it’s late, up to a maximum of 25%. Interest will also be added onto your total due, with the current rate at 0.6042% per month. The rates for previous years can be found here. In addition, a negligence penalty may be assessed, along with an examination fee.
With so many factors impacting when you need to collect sales tax from your Louisiana customers and at what rate, it’s essential that you stay on top of things to ensure you’re always compliant with local rules and regulations. This is compounded by the fact that rates and other elements of state sales tax laws can change at any time, and so you need to keep up to date with those changes as well. States are increasingly trying to adjust to the large volume of sales that are completed online, with the result that new regulations surrounding these types of transactions are to be expected more and more frequently going forward.
The challenges of staying on top of all of this is compounded further if you do business in more than one state, and so it can be very helpful to have software designed to help you in these types of situations. TaxTools is just such a program, and its ability to track changes to local sales tax rates, provide up-to-date information on sales and payments, and organize data separately for each state you make sales in will greatly streamline your accounting processes. TaxTools integrates smoothly with all eCommerce platforms, so you won’t need to change anything else about the way you do business in order to take advantage of its benefits.