Sales and Use Taxes in Louisiana

April 13, 2006

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In Louisiana the sales tax is a general tax levied on retail sales of tangible personal property or on its lease or rental and on the furnishing of specified services. Specified services include lodging and associated storage and parking, admissions, printing, cleaning, cold storage, and repairs of tangible personal property, and telecommunications.

Sales and use tax rate. The Louisiana sales and use tax rate is 4 percent. In addition, make sure you contact your local governments in Louisiana because they are allowed to assess a local sales and use tax which is currently up to an additional 5 percent.

Tax-exempt items. Louisiana has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Louisiana sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Louisiana, the sales taxes are collected by the seller (referred to as a "dealer" in Louisiana) from the purchaser or consumer. Wholesalers are required to collect advance sales taxes from dealers. Wholesalers include manufacturers, jobbers, and suppliers selling to anyone (retailers) for sale at retail. Retail dealers who have made advance payments of sales tax to wholesalers can then deduct the payments from the total tax collected by them when the items are sold at retail. Invoices from the wholesalers showing the advance payment is required to support the deduction.

Warning

When it comes to sales and use tax, Louisiana is different than other states in many ways. If you are a retailer purchasing goods for resale you must pay the sales tax to your wholesaler. If you are a wholesaler selling goods to a retailer who will in turn sell the goods to individual customers, both you as a wholesaler must collect sales tax from the retailer and then the retailer must collect sales tax from their customers. However, remember that if you are a retailer you will be able to deduct the advance tax payments when you remit your tax collections over to the state.

Use tax. The use tax is levied on the consumption, use, distribution, or storage of tangible personal property in the state. The use tax is a complementary tax and does not apply in situations where the sales tax is collected.

Obtaining tax permits in Louisiana. In Louisiana, dealers (sellers) must register for sales and use tax purposes. However, vendor registration is informally authorized in Louisiana, not specifically being a part of the law or related regulations. In Louisiana, dealers are asked to contact the Application Central Registration Unit within the Department of Revenue and Taxation. They will then be furnished an application form and directions as needed for completing registration. Once registered, dealers will be sent appropriate return forms.

Leases. Almost all lease or rental transactions are subject to the sales and use tax. Lease or rental means the possession or use of tangible personal property by the lessee or rentee for a consideration, without transfer of the title of the property. Rental-purchase agreements are considered to be sales for sales tax purposes. The tax due on such transactions is payable in equal monthly installments over the entire term of the agreement, rather than at the inception of the agreement.

The following discussions address additional sales and use tax issues that many small business owners face: