By Tram Le
Louisiana began enforcing a 2-year old law on economic nexus along with a marketplace law on July 1.
Beginning July 1, 2020, the Louisiana Department of Revenue will enforce its economic nexus law that requires remote sellers to collect and remit sales tax if sales into Louisiana exceed $100,000 or 200 transactions in the current or previous calendar year. Louisiana has delayed enforcement of its economic nexus law for over 2 years, giving remote sellers ample notice and time to get registered to collect and remit tax.
Louisiana originally enacted it’s economic nexus law on June 12, 2018 (HB 7, prior to the Wayfair decision on June 21, 2018) and revised its law on March 29, 2019 (HB 547) to refine remote sales to include sales made by a remote seller or facilitated by marketplace facilitator. Once the thresholds have been exceeded, the economic nexus laws give remote sellers 30 days to apply for a sales tax license and 60 days to start collecting and remitting state and local sales tax.
Similar to remote sellers, marketplace facilitators that meet the economic nexus threshold will be considered the dealer for each remote sale for delivery into Louisiana and required to register with the state and comply with sales and use tax laws. Marketplace facilitators that exceed $100,000 in sales or have at least 200 transactions trip the economic nexus test and must register within 30 days and begin collecting state and local sales tax within 60 days of approved registration.
Marketplace facilitator relief is provided for facilitator’s that fail to collect the required tax due to incorrect or insufficient information provided by the seller. In this situation, the facilitator is relieved of liability and the marketplace seller is liable for uncollected and unremitted tax due (SB 138).
A marketplace facilitator is defined broadly as a person who facilitates a sale for a seller by offering for sale through any means, by a seller, tangible personal property or sales of services for delivery into Louisiana or collecting payment from the purchaser and transmitting all or part of the payment to the seller. The law excludes third-party payment processors, advertising service platforms and persons facilitating the furnishing of hotels or rental cars from the definition of marketplace facilitator.
With this implementation in Louisiana, a total of 43 states along with the District of Columbia have now adopted or enacted economic nexus rules (with only Florida and Missouri without economic nexus rules) and all but four states (Florida, Kansas, Mississippi and Missouri) with a sales tax to require marketplace facilitators to step up and collect tax. To avoid hefty late filing and payment penalties and interest, remote sellers with Louisiana sales should determine if they have exceeded thresholds and apply to collect and remit tax on remote sales into Louisiana.
We are here to help. Contact your TaxOps State and Local Tax Advisor for guidance on assessing your nexus footprint and sales tax duties.
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