How do I know if I must register to collect sales tax in Louisiana?

You must register if you have a taxable presence in the state, which includes physical locations, employees, or economic nexus from exceeding sales thresholds. Remote sellers should monitor sales to Louisiana customers and register when thresholds are met.

What documentation is needed for exempt sales?

Exempt sales generally require properly completed exemption certificates or qualifying documentation for nonprofits, resale, or specific exempt items. Maintain these records to substantiate non-taxed transactions during audits.

Louisiana Sales Tax: Rates, Rules & Resources

Everything You Need to Know About Louisiana Sales Tax At Avalara, we work with businesses of all sizes and types.

A Practical Overview for Sellers

How does sales tax in Louisiana apply to businesses? This guide breaks down the state and local rate structures, registration and filing requirements, common exemptions, and best practices in collection to keep you compliant while mitigating risk.

State and Local Rate Structure

Louisiana has a state wide sales tax, and parishes and municipalities may levy additional sales taxes. The total combined rate you must charge a customer is the state tax rate plus all applicable local rates. Local rates can vary widely and change often; certain parishes and cities have numerous local levies that apply to different types of transactions.

Sellers need to verify the proper combined rate to charge based on the delivery address or location of sale. For offline sales the physical shop location often dictates local rates. For out-of-state vendors who deliver goods to Louisiana customers, destination address generally determines the applicable rates.

Taxable Transactions and Taxable Services

Louisiana sales tax applies to more than just tangible goods; many services are also taxable. Examples include repairing and installing personal property, renting out property not in real estate, and some professional services when specifically categorized as taxable under state guidelines. It is important to properly categorize things and services because some that appear to be exempt become taxable when attached to a bundle of goods that are not.

Exemptions and Exempt Sales

Louisiana has a list of exemptions for various categories, such as medical items and groceries in limited cases, machinery for manufacturing and sales to certain nonprofits or government bodies. Exemptions typically must be properly documented on an exemption certificate retained by the seller. Retailers must keep accurate records of the exemption certificates and other documentation to prove sales that are not taxed in case they are audited.

Registration and Collection Obligations

Every company that has a presence in the state that is subject to sales tax, is required to register for a sales tax account. Registration is how your account for filing and paying the taxes you receive. Physical presence can include things like a store, warehouse or salesperson; economic presence is created when a remote seller makes sales to Louisiana customers that exceed state sales thresholds.

Once a seller is registered, the seller is required to collect sales tax at the time of sale and indicate on its receipts as applicable: “sales tax – separately stated;” or remit by the due date indicated on the registration notice. The frequency of filing (monthly, quarterly or annual) is based on the amount of sales tax collected. Filing and reporting in a timely manner is important—late returns and payments can result in penalties and interest.

Remote Sellers and Economic Nexus

Remote sellers whose sales volumes in a state meet or exceed sales thresholds set by the state are obligated to collect and send in Louisiana’s sales tax even if they don’t have a presence there. Economic nexus thresholds are generally based on a total amount of sales revenue or number of transactions in the state within a lookback period. Remote vendors should keep a close watch over their sales to Louisiana customers and register immediately when they exceed the limit.

Marketplace Considerations

If you sell on a marketplace or through a third-party facilitator, know who is responsible for collecting and remitting the tax. Either the marketplace or seller could be the collection agent, depending on how rules are structured. Sellers that work with intermediaries should make contractual obligations clear and ensure tax collection and reporting practices are in line with Louisiana law.

Filing Returns and Remitting Tax

When filing a sales tax return it is essential to report all taxable sales, exempt sales and the tax that was collected for these transactions as well as any processing discrepancies such as taxable allowances or credits. There are some sellers who owe use tax on sales where no sales tax was collected. You must remit the payments by the date on which you need to file your return. Most filers file electronically; verify the results of your accounting in relation to filed returns so discrepancies will not occur.

Audits, Penalties, and Recordkeeping

Audits determine whether a seller has properly collected and paid sales tax. Proper documentation — sales records, exemption certificates, invoices and shipping documents — will lower your audit risk and help get it resolved fast if you are audited. Failure to file, underpaying, and under reporting can result in big penalties; interest on unpaid amounts also apply. Where voluntary disclosure programs are provided, they may involve incentives for compliance and/or elimination of penalties on tax that should have been previously collected, but the terms of such programs vary.

Practical Tips for Compliance

Tables with up to date rates: local rates can change, but easy access to combined rates for each sales channel is important.
Categorize products and services with care: Misclassification can result in over- or under-assessment. Review the descriptions and categorizations of your products and services frequently.
Need exemption paperwork: Keep all non profit and resale sales tax exempt certificates on file. Validate certificates periodically.
Remote Seller – Monitor sales: Monitor your sales into Louisiana and set notifications for when you exceed the threshold that would trigger a collection or registration obligation.
Reconcile monthly: Every tax-filing period, compare point-of-sale (POS) records to tax returns and catch errors early.
Train staff: Train sales and accounting associates on tax collection policies, exempt transactions processing, and returns and refund procedures.

Handling Special Situations

Certain transactions require special handling. For example, sales of information or digital products may be taxable based on characterization. Taxability of service versus goods may be different for sales with and without installation. Likewise, sales shipped from an out-of-state warehouse but destined for a popular destination must account for destination-based taxing and potential use tax exposure.

For large capital purchases, check exemptions for manufacturing equipment, don't simply assume an exemption. Receive a resale certificate for sales that are intended to be resold and retain it on file.

When to Seek Professional Help

Complex multijurisdictional sales, frequent rate changes, large volume remote seller activities or a history of audit adjustments often indicate the need for professional tax guidance. For guidance around nexus analysis, exemption qualification, audit defense and structuring transaction to ensure compliance without excessive tax exposure it may be wise to seek a tax professional.

Summary

Louisiana’s sales tax is a combination of state and local taxes that applies to a wide variety of goods and services. Compliance includes the proper application of rate determination, the prompt registration and payment of fees, exemption recognition and retention of all required records. Monitor sales to see if economic nexus is triggered, keep up with local rate changes and put internal controls in place to collect and remit tax correctly. By keeping a close eye on these areas, SELLERS can minimise the risk of being non-compliant – and subsequent heavy fines.