If you’re a remote seller trying to figure out your tax obligations in Louisiana, you’re in the right place. In this blog post, we’ll break down the important stuff and tell you how to establish your sales tax connection in the Pelican State.
Sales tax nexus is the legal connection between a business and a state, which obligates the business to collect and remit sales tax on sales made within that state. Determining when and how to establish nexus is crucial to compliance for remote sellers.
In Louisiana, several factors can trigger sales tax nexus:
- Physical presence
- Economic nexus
Physical Nexus
A seller having physical presence is a Dealer and subject to regular state and local sales tax collection and remittance requirements. If you have a storefront, warehouse, office, or employees within Louisiana, then you have physical nexus. A Dealer is not a remote seller.
Economic Nexus
A seller without physical presence but having economic nexus is a Remote Seller. And if a remote seller meets either of the following criteria during the previous or current calendar year, then they are required to register in Louisiana:
Gross revenue
The person’s gross revenue for sales delivered into Louisiana has exceeded $100,000 from sales of tangible personal property, products transferred electronically, or services.
Units sold
The person sold for delivery into Louisiana tangible personal property, products transferred electronically, or services in 200 or more separate transactions.
Furthermore, Act 5 further provides that “[a] person without a physical presence in Louisiana may voluntarily register for and collect state and local sales and use taxes as a dealer, even if they do not meet the criteria…” mentioned above.
For purposes of calculating the economic nexus thresholds, does a remote seller include both direct sales for delivery into Louisiana and sales made through a marketplace?
The remote seller should only consider direct sales for delivery into Louisiana to calculate whether the economic nexus thresholds have been met. The sales made through a marketplace may be excluded because those sales determine whether the marketplace itself meets the economic nexus thresholds.
Example
Remote Seller sells $75,000 of tangible personal property for delivery into Louisiana during the calendar year. These remote sales are sold directly by the Remote Seller. Remote Seller also sells $35,000 of tangible personal property for delivery into Louisiana during the calendar year through a marketplace.
Under these facts, the Remote Seller has not met the economic nexus threshold provisions because the Remote Seller may exclude the remote sales made over the marketplace. This example does not consider the transaction-based economic nexus threshold.
For more information on the impact of the Wayfair decision on remote sellers selling to Louisiana purchasers, download this Remote Sellers Information Bulletin from the Louisiana Sales and Use Tax Commission for Remote Sellers of the Louisiana Department of Revenue.
For the most frequently asked questions, visit this link from the Sales and Use Tax Commission for Remote Sellers.