After you register to collect sales tax in Louisiana, it's your responsibility to apply the correct rates to each sale, remit those taxes to the state, file timely returns and keep excellent records. As a home-rule state, Louisiana has unique sales tax rules and filing requirements.
For example, it's a destination-based state, meaning that you're responsible for applying the proper tax rate based on the ship-to address for each taxable sale. And the sales tax laws in Louisiana are complicated by the fact that each city, town, fire district and school board can set its own local tax rates.
Adding to the complexity is the fact that the Pelican State requires remote sellers with economic nexus to register with the state tax department plus the parishes aka counties where they make sales. In addition, the state's local sales tax systems vary from one city to the next, and each may have its own rates, rules and exemptions.
According to the Tax Foundation, Louisiana Streamlined Louisiana Property Sales ranks 48th in the nation for overall tax complexity. The state's local government organizations municipal, sheriff's, police jury and school board associations are working on a new system designed to simplify the process for taxpayers.
The local boards will either select an existing sales tax software program or design a custom system that would allow sellers to remit state and local sales tax in all 54 parishes through a single site. It's expected to be up and running in January 2021.
A sales tax software program can help you determine whether or not you have nexus in the states where you sell, and it can automate many of the repetitive tasks associated with collecting, calculating and reporting sales taxes. But if you want to reduce your risk of an audit, it's best to work with a certified service provider (CSP). A CSP is an independent firm that's authorized by the Streamlined Sales and Use Tax Agreement to perform all of a seller's sales and use tax functions, including registration, collection, calculation, filing and remittance.
A CSP is compensated directly by the Streamlined Sales Tax member states for their determination and filing services. To qualify as a CSP compensated seller, a seller must register through Streamlined's streamlined sales tax registration system and have no physical presence in the state or significant property, payroll or employees there. You can assess your status with Sovos' free economic nexus tool.