Louisiana Enacts Economic Nexus Provisions

Effective Date: July 1, 2020

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 excluding marketplace sales

When You Need to Register Once You Exceed the Threshold: Within 30 days of exceeding the threshold, the remote seller must submit an application to the Louisiana Remote Seller Commission and must begin collecting state and local sales and use tax based upon actual applicable bases and rates on sales for delivery into Louisiana within 60 days.

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.

UPDATE: Louisiana Governor signed H.B. 547 on June 17, 2019 which will require the Louisiana Sales and Use Tax Commission for Remote Sellers to select an enforcement date of no later than July 1, 2020 for the state’s economic nexus ruling and publish a notice of enforcement at least 30 days before that date.

UPDATE: The Louisiana Department of Revenue has released two additional bulletins providing additional administrative guidance for remote sellers as to an effective date for economic nexus and a special combined rate. For more information, read our news item: Louisiana Releases Additional Remote Seller Guidance.

UPDATE: For remote sellers or facilitators that exceed the threshold as of July 1, 2020, an application must be filed no later than July 31, 2020. A marketplace facilitator shall commence collection of tax once they are notified that the Commission has approved the application, no later than 60 days after meeting either of the above criteria or by August 30, 2020. Remote sellers/marketplace facilitators will not be required to register with each Parish but will be required to collect the actual tax for each Parish based on the delivery address. For those sellers that have been registered as a Direct Marketer and collecting the flat 8.45% rate, their registration will be converted to the Remote Seller registration if their sales have exceeded the threshold.

Posted on June 25, 2018