If you have dealt with multi-state tax before, you know how varied and complex some state legislation can be. One state with a particularly complicated sales tax system is the lively state of Louisiana. In this blog article, we discuss what makes Louisiana’s tax climate unique, as well as a recent lawsuit they faced because of it.
The Complexity Of The Louisiana Sales Tax System
In most states, your only requirement is to collect and remit sales tax based on the rate in the states you do business in. If you have sales tax compliance in Louisiana, however, not only do you have to collect and remit tax to the state, but you are also required to separately collect and remit sales tax in each individual parish (or county) that you do business in. There are 64 parishes in Louisiana, so it can become complex and time-consuming very quickly, especially for small businesses and businesses that already have multi-state tax obligations.
Louisiana also has the highest combined state and local sales tax rate in the United States, at 9.55%. The next two highest are Tennessee at 9.547% and Arkansas at 9.48%. Sometimes, particularly for small businesses, the time and money that extra sales tax compliances take can outweigh the benefits of selling products in the state.
Who Sued Louisiana And Why?
According to US News, Halstead Bead Inc., an Arizona-based company that sells jewelry-making products online, filed a federal lawsuit against Louisiana challenging the current tax system. They said that requiring out-of-state businesses to file reports in each parish they have sales in creates a “compliance nightmare.”
Halstead Bead Inc. is asking the court to declare Louisiana’s parish-by-parish sales tax system an unconstitutional burden on interstate commerce. In its lawsuit, which was filed in November 2021, the company said that it plans to limit sales in Louisiana until the regulations change.
The suit was filed only days after voters in Louisiana rejected a proposed amendment that would have replaced the parish-by-parish sales tax system with a single state system.
Stay caught up on our blog for updates to this story and any changes that Louisiana makes to their tax system.
Do You Need Help With Your State Sales Tax Compliance?
As you can see, state tax legislation is complex, and working with an experienced team of state tax consultants like Miles Consulting Group is a great way to ensure you meet all of your sales tax obligations. If you have questions about your tax liability or any other state sales tax compliance questions, please contact us today. We’re happy to clarify any multi-state tax issues you’re trying to navigate.
