Louisiana Enacts Economic Nexus Provisions

Effective Date: TBD with 30 days notice

Threshold: Gross revenue exceeds $100,000 or 200 or more separate transactions

Measurement Date: In the previous or current calendar year

Includable Transactions: Gross sales

When You Need to Register Once You Exceed the Threshold: Registration required after passing threshold: remote seller should submit the Form R-1031A within thirty days of surpassing either of the thresholds. Assuming the application is approved, the remote seller should commence collection of sales and use tax on sales for delivery into Louisiana no later than ninety days from the date the remote seller surpassed either of the thresholds.

Louisiana has enacted economic nexus provisions. Per the legislation, out-of-state sellers without physical presence are considered a dealer for Louisiana sales and use tax purposes if during the previous or current calendar year either of the following criteria was met:

  • The person’s gross revenue for sales delivered into Louisiana exceeds $100,000 from sales of tangible personal property, products transferred electronically, or services.
  • The person sold for delivery into Louisiana tangible personal property, products transferred electronically, or services in 200 or more separate transactions.

The State has established the Louisiana Sales and Use Tax Commission for Remote Sellers.  This Commission will serve as the single entity in Louisiana to require remote sellers and their designated agents to collect tax from customers and remit tax.  The Commission will establish a uniform Louisiana state and local sales and use tax base and serve as a single point for sellers to collect and remit state and local taxes on their sales into the state.  This appears to resolve issues with registration with each locality.  The Secretary of the Department of Revenue will publish notification of the establishment date of the Louisiana Sales and Use Tax Commission for Remote Sellers. Tax will be due under Louisiana law with respect to any federal law as may be enacted by Congress or final ruling by the U.S. Supreme Court authorizing states to require remote sellers to collect and remit state and local sales and use taxes on their sales in each state, except those remote sellers who qualify for exceptions as may be provided by federal law.

The provisions of this legislation will apply to all taxable periods beginning on or after the date of the final ruling by the U.S. Supreme Court in South Dakota v. Wayfair Inc finding South Dakota 2016 Senate Bill No. 106 constitutional. The Department of Revenue has issued a bulletin indicating that it is still some time away from a final decision. Therefore, we do not believe the provision will be enforced until the state issues further guidance. (H.B. 17 (Act No. 5), effective June 12, 2018)

UPDATE: On June 21, 2018, the Louisiana Department of Revenue issued a news release on the South Dakota v. Wayfair decision, stating that they will provide updates. You can also monitor the DOR’s News Releases webpage for updates.

UPDATE: On August 10, 2018, the Louisiana Department of Revenue issued Remote Sellers Information Bulletin No. 18-001, updating the Department’s position on implementation for remote seller collection requirements, targeting January 1, 2019 as an enforcement date. “… the Commission will not seek to enforce any sales or use tax collection obligation on remote sellers based on the Supreme Court’s decision in South Dakota  v. Wayfair or the provisions of Act 5 as it relates to the expanded definition of dealer for any taxable period beginning prior to January 1, 2019.” The bulletin also says that the Louisiana Uniform Local Sales Tax Board “is issuing guidance to local sales and use tax collectors to not seek retroactive application of the South Dakota v. Wayfair decision.” Any remote seller who is not currently registered with the Department of Revenue or a local sales and use tax collector can voluntarily register with the Department of Revenue to begin collecting and remitting sales and use tax in accordance with LA R.S. 47:302(K) using the Form R-1031A, Application to File Direct Marketer Sales Tax Return. As provided in Revenue Information Bulletin 18-019, the remote seller voluntarily registering and collecting under LA R.S. 47:302(K) would collect and remit sales and use tax at a total combined rate of 8.45 percent for state and local taxes. The form for filing and remitting the sales and use tax is Form R-1031, Direct Marketer Sales Tax Return.

UPDATE: The Louisiana Sales and Use Tax Commission for Remote Sellers released a draft Information Bulletin 18-002 on November 28, 2018 and threw into question the enforcement date for remote seller sales tax registration and collection obligations. The bulletin states: “If the remote seller has not previously registered with LDR, the remote seller should submit the Form R-1031A within thirty days of surpassing either of the thresholds of LA R.S.47:301(4)(m)(i). Assuming the application is approved by LDR, the remote seller should
commence collection of sales and use tax on sales for delivery into Louisiana no later than ninety days from the date the remote seller surpassed either of the thresholds of LA R.S.47:301(4)(m)(i). If the application is not approved, the applicant should adhere to the instructions set forth in the notice from LDR.” The bulletin concludes that remote sellers can expect at least thirty days’ notice prior to the commencement of mandatory collection and remittance requirements, but should consider voluntarily collecting and remitting sales tax on remote sales in the interim.

Posted on June 25, 2018