Effective July 1, 2025, Louisiana has enacted legislation that adds a definition for “drop shipment sale” and adds drop shipment sourcing rules.
Per the legislation, “Drop shipment sale” means a sales transaction in which goods are shipped directly to the customer by a third party. Drop shipment sales include sales in which a dealer accepts an order for goods from a customer and places the order with a third party, and the third party delivers or causes to be delivered the goods directly to the dealer’s customer.
The legislation states that drop shipment sales shall be sourced to the location of the transfer of title or of possession, whichever occurs first.
Additionally, abstracts of title created by a person having a place of business in Louisiana shall be sourced to the location of the person’s principal place of business in Louisiana.
Drop shippers making sales into Louisiana will want to make note of the sourcing rules provided in the legislation. (Act 498 (H.B. 404), Laws 2025)