Louisiana’s unique taxability rules and varying jurisdictional rates can make sales tax compliance challenging. Due to the number of parishes in the state, your business must track every customer’s address to correctly collect and file a sales tax return.
Completing a Louisiana sales tax return is a three-step process. Businesses must first understand how to collect sales tax in Louisiana, then prepare the return, and finally, file and remit sales tax. Following this process will help you prepare for and complete your return smoothly and accurately.
What’s in this article?
- How to collect sales tax in Louisiana
- How to prepare your Louisiana sales tax return
- Identify taxable sales transactions
- How to file and remit a Louisiana sales tax
How to collect sales tax in Louisiana
Before you start collecting sales tax, you should first determine if the products or services you’re selling are taxable, and ensure you’re registered to collect Louisiana sales tax. In Louisiana, you could register for multiple license types depending on your business activities: direct marketer, remote seller, or standard.
The next step is to determine how much sales tax to collect. Similar to counties or boroughs in other states, Louisiana is divided into what are called parishes. Louisiana is a destination-based sales tax state, meaning you should charge all customers located in Louisiana the sales tax rate where the item is being delivered. That could include a combination of state, county, city, parish, and district tax rates.
In Louisiana, businesses with standard license types are required to report, collect, and remit sales tax in each individual parish where they make sales. Remote seller license types report, collect, and remit sales tax on a single form. Direct marketer license types collect and remit a flat rate and no parish data is required, which is one of the reasons sales tax compliance can be difficult in Louisiana.
The current sales tax system in Louisiana requires businesses to maintain sales tax reports, collect sales tax, and remit in each individual parish where they do business. There are 64 parishes in total, meaning a business could have to file in 64 different parishes in addition to filing state sales tax. However, remote sellers and direct marketer sellers only file one sales tax return.
How to prepare your Louisiana sales tax return
Before you start your return, it’s important to know your filing frequency. You will be assigned a filing frequency when you register for your sales tax permit. In Louisiana, you will be required to file and remit sales tax either monthly or quarterly. Louisiana sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
To prepare your return, you will start by collecting the sales information for the tax period—this may be a month, a year, or a quarter. Filing a sales tax return generally requires the following sales transaction information:
- Gross sales
- Taxable sales by type
- Nontaxable sales by type
- Deductions such as shipping charges
- Total collected sales taxes
Identify taxable sales transactions
Businesses will need to know two things to complete their Louisiana sales tax return: how much they sold—both in total sales and in taxable sales—and to whom they sold.
If the amount of taxable sales does not reach economic nexus thresholds in Louisiana, then a sales tax return might not be required. In addition to meeting economic nexus thresholds, if a business has employees, an office, or a warehouse located in Louisiana and is selling taxable goods and/or services, the business must collect sales taxes on all taxable transactions, file returns, and pay the appropriate amount to the state.
In addition to the parish-by-parish system, another reason sales tax compliance in Louisiana is cumbersome is because of the large number of exemptions, exclusions, and sales tax credits in the state. It’s difficult for sellers to determine when they should charge sales tax on a product. The state has 192 total sales tax exemptions, exclusions, and credits in place. A full list of exemptions can be found on the state website.
Additionally, there are a few other requirements to consider when preparing your Louisiana sales tax return:
- Zero returns: Louisiana requires any business with a sales tax permit to file a sales tax return on your due date, even if you don’t have any sales tax to report or pay. If you fail to file, Louisiana will levy a late filing penalty even if you don’t owe any sales tax.
- Late returns: If a sales tax return is filed late, a delinquent penalty of 5% of the tax due for each 30 days, though not to exceed 25% of the net tax due, is imposed. Find more information about the state’s late filing policy on the state website.
How to file and remit sales tax in Louisiana
How you will file in Louisiana depends on your license type. Below are the different ways to file and remit sales tax in Louisiana: