Sales Tax Fundamentals
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Economic Nexus Laws by State: Louisiana
byJune 3, 2020
State laws on economic nexus vary and it can be hard to keep up if you’re doing business in multiple states.
As of May 7, 2020, the Louisiana Sales and Use Tax Commission for Remote Sellers announced the date remote sellers are required to register to collect sales tax.
Here’s all the information you need to know about economic nexus laws in Louisiana.
What is economic nexus in Louisiana?
With the South Dakota v. Wayfair Supreme Court ruling in 2018, states are now free to pursue sales tax from eCommerce businesses who have an “economic presence” in their state.
Significant presence or “nexus” was previously defined as having a physical presence (ex: a brick & mortar store, employee or inventory in a fulfillment center like FBA). But with this recent ruling, now this definition has been expanded to include economic activity in a state as well. This concept of triggering sales tax responsibility because of your economic activity in a state is now referred to as economic nexus.
Most importantly, what this means is that if you pass a state’s economic threshold for total revenue in that state and/or number of transactions in that state, you’re now legally required to register, collect and remit sales tax for that state.
Louisiana enacted an economic sales tax law on June 12, 2018, and in December, announced the enforcement date would be “a date to be determined in 2019.” Out-of-state sellers were promised “at least thirty days’ notice prior to the commencement of mandatory collection and remittance requirements.”
On May 7, 2020, that notice was given for July 1, 2020. Remote sellers must register a sales tax permit in Louisiana within 30 days of meeting economic nexus thresholds, and start collecting sales tax “no later than 60 days after surpassing” the economic nexus threshold, detailed below.
Louisiana further announced that they would provide guidance in the days leading up to July 1, 2020.
What’s the threshold for economic nexus law in Louisiana?
- State: Louisiana
- Threshold:$100,000/year in gross revenue, or makes sales into Louisiana in more than 200 separate transactions in the previous or current calendar year
- Summary: According to the state, sellers that meet either the sales or transaction number thresholds are required to register for a Louisiana sales tax permit, collect sales tax on sales that ship into Louisiana, and remit sales tax to the state.
- Full text: You can read the text of Louisiana economic nexus law here.
- More: You can read the Louisiana Department of Revenue’s news release about South Dakota v. Wayfair and economic nexus here. And their updated guidance for remote sellers with economic nexus here.
When did this Louisiana law go into effect or is it planned?
This law will go into effect July 1, 2020.
What about marketplace facilitator laws?
Under Louisiana’s marketplace facilitator law, marketplaces are required to collect and remit sales tax on all taxable remote sales for delivery into Louisiana if the marketplace facilitator’s gross revenue exceeds $100,000 or made 200 or more transactions in the previous or current calendar year. This went into effect on July 1, 2020. Marketplace facilitators are required to register with the state within 30 days of meeting either the $100,000 revenue threshold or 200-transaction threshold. More information on this law can be found here.
I’ve been collecting and remitting sales tax to Louisiana voluntarily. Now what?
Some remote sellers chose to voluntarily collect and remit at the statutory 8.45% sales tax rate prior to this enforcement date, rather than the actual rate in effect at each location.
The Louisiana Department of Revenue and the Sales and Use Tax Commission for Remote Sellers will contact these sellers later in the month with step-by-step details on the transition process. “No action is required until those direct marketers receive this correspondence.”
Direct marketers who don’t meet either of the economic nexus thresholds ($100,000 in sales or 200 transactions) may continue to collect and remit the single 8.45% rate.
I’m close to meeting this threshold for Louisiana. How do I know when I have reached it?
With TaxJar’s Economic Nexus Insights Dashboard, you can see where your business currently has nexus, where you’re approaching nexus, and recommended next steps on how to begin complying with sales tax in all states.
Proactive notifications let you know when you’re approaching or have reached thresholds, so you can stay in front of any changes to your nexus requirements.
I meet the economic threshold requirement in Louisiana. Now what?
Here’s a quick checklist of what to do next:
- Register for a sales tax permit in Louisiana (info below)
- Choose a technology like TaxJar to help you manage multi-state compliance. Sign up for a free 30-day trial to see how we can help you save time!
- Connect TaxJar once to all of the places you sell
- Ensure all your eCommerce channels are setup correctly to collect sales tax
- Enroll in AutoFile and tell us how often you need to file
- Relax, you now handled your sales tax exposure. We’ll handle the rest for you.
Can you help me register for a sales tax permit?
Certainly! TaxJar offers these two options:
- Read our do it yourself instructions for every state
- Visit TaxJar.com/register to have one of our expert partners do it for you (~$100 each state not including state’s fees)
Who can handle my Louisiana sales tax filings for me?
At TaxJar, we help more than 10,000 sellers manage their sales tax needs every month. We help your business save on submitting your returns with our automated filing service called AutoFile. Read more about how AutoFile can handle all of your returns in as many states as you’d like.
I’ve met this threshold in Louisiana, now where can I ask questions?
Above all, we recommend speaking with a vetted sales tax expert to answer specific questions for your business.
You can also join our online community of 11,000+ e-commerce sellers, Sales Tax for E-Commerce Sellers.