Louisiana ‘months away’ from mandatory online sales tax
BATON ROUGE, La. (AP) — Louisiana has ramped up its push to collect more sales taxes from internet purchases, but still hasn’t set a deadline to try to force out-of-state companies that sell online products in the state to remit taxes for those sales.
A state sales tax commission has set rules for collecting taxes for online sales from large out-of-state retailers, defining who is subject to Louisiana sales tax, how they should register with the state and how they turn over the sales taxes they collect.
But for now, following those regulations is voluntary from retailers who don’t have a physical store in Louisiana and only sell to residents through online sites.
“We are working through when we will have mandatory compliance,” said Revenue Secretary Kimberly Robinson. “I think it’s just months away.”
More online retailers have started voluntarily charging and turning over sales taxes to Louisiana since a June ruling from the U.S. Supreme Court paved the way for states to require the tax collections for online purchases.
In its South Dakota v. Wayfair decision, the court upheld a South Dakota law that targeted online retailers who avoided collecting sales tax because they didn’t have a physical presence like a store or distribution center in a state. The court threw out a decades-old exemption.
Robinson said it’s too soon to determine the size of the uptick in Louisiana sales tax collections since the ruling. The revenue department, she said, should have a better idea early in 2019 after tallying the most recent quarter.
Before the high court’s decision, Louisiana had laws aimed at being able to take in taxes from online shoppers and already collected some sales taxes voluntarily from retailers like Amazon. But the state’s complex, parish-by-parish sales tax system complicates efforts to force compliance from out-of-state retailers.
In Louisiana, parishes levy their own local sales tax rates and handle sales tax collections. That creates a hodgepodge system that regularly receives criticism for lacking the uniformity of many other states and creating unnecessary complexity for businesses trying to follow the rules.
The sales tax commission, led by Robinson, is serving as the single online sales tax collector for out-of-state companies that only do business in Louisiana through internet sales. The regulations target “remote sellers” who do more than $100,000 in sales in Louisiana or have more than 200 transactions in the state.
Though sales tax rates vary from parish to parish, the state is collecting an 8.45 percent rate from online vendors located outside Louisiana who are voluntarily submitting the taxes. The collection includes the state sales tax rate of 4.45 percent and a 4 percent rate that gets divvied up among local governments based on parish population.
Robinson said the online sales tax collections will become mandatory when the state has a centralized software system that can charge out-of-state website retailers the 4.45 percent state sales tax rate and the varying local sales tax rates based on where the purchaser lives.
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