Parish-By-Parish: A Helpful Guide To The Complex Louisiana Sales Tax System
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.
Focus on Arkansas
This month we travel to the southern state of Arkansas, the Natural State. It is known for its abundant parks and wilderness areas, with terrain encompassing mountains, caves, rivers and hot springs. The rugged Ozarks region in the northwest portion of the state has hiking trails and limestone caves, such as Blanchard Springs Caverns.
The state’s diverse geography varies from mountain ranges from the Ozark and the Ouachita Mountains, which make up the U.S. Interior Highlands, to the densely forested land in the south known as the Arkansas Timberlands, to the eastern lowlands along the Mississippi River and the Arkansas Delta.
Arkansas’s enduring image has earned the state “a special place in the American consciousness.” People such as politician and educational advocate William Fulbright, former President Bill Clinton, former secretary of state Hillary Clinton, former NATO supreme Allied Commander General Wesley Clark, Walmart magnate Sam Walton, singer-songwriters Johnny Cash and Glen Campbell, the poet C.D. Wright, and physicist William L. McMillan, who was a pioneer in superconductor research, have all lived in Arkansas.
Love And Taxes: How Are Your Favorite Valentine's Day Products Taxed?
Romantic dinners, bouquets or chocolates - how are you spending Valentine's Day this year? As we approach the holiday of love, we thought it would be interesting to see how sales tax applies to different products or situations you may encounter!
Gifts: Taxable Or Not?
Are you thinking of getting your valentine a box of chocolate, candy or other food gift this year? Food and candy sales tax varies depending on the state. What you pay in taxes in one state for a box of chocolates will be completely different in another. One of our latest blog articles dives into specific state tax rates on candy.
If you buy them another sort of gift, such as a stuffed animal or flowers from a brick and mortar store, your local state sales tax will apply to that item. Again, state sales tax varies.
If you buy the gift online, you will most likely have to pay sales tax, thanks to the 2018 Supreme Court Case, South Dakota v. Wayfair, Inc. Every state that has sales tax now has implemented some level of economic nexus. Oh, and shipping? Yes, maybe sales tax is due on that fee as well - depends on the state and how it's stated on the invoice.
Event Tickets
Taking your valentine to a ticketed event like a sports game or show? You will be charged sales tax based on the state that it is in. If you are attending an online event - which has gained popularity throughout the COVID-19 pandemic - it gets a little trickier since often people from any state can attend. So which state's sales tax rate are you charged? Though there is not one clear answer to this question, most of the time you will be taxed the rate from wherever the virtual event is "held." This article dives deeper into the topic of virtual events and sales tax.
Romantic Dinner & Sales Tax
If you decide to cook a romantic dinner at home, it will most likely not be taxed - though 13 states still do charge at least a slight sales tax on groceries.
Going out is a different story. If you decide to dine in a restaurant, or get takeout, you will be taxed at different rates and for different items depending on the state.
This article has a guide to state-by-state to-go, restaurant and grocery sales tax, but here are a few examples of state requirements:
- In our home state of California, most taxable sales at a restaurant are going to be of food and beverages - however in some instances you are charged sales tax on corkage fees, cover charges and other things.
- Prepared food is taxable in Washington.
- "Restaurant-type food" is taxable in New York. This includes food sold at a restaurant or similar establishment in a form ready to be eaten. For example, a bag of bagels would not be taxable, but a sliced, ready-to-eat bagel would be.
Still Looking?
Still firming up who your valentine might be for the big day? If you subscribe to online dating apps, you may be charged sales tax on the monthly charge for the app. Sometimes apps like that decide to cover the sales tax themselves, rather than to charge it through to the customer.
As you can see, sales tax gets complicated quickly and typically varies by state. Don't worry about it too much this week, and enjoy Valentine's Day with your loved ones. Our team of experts can help determine your tax liabilities after the holiday! But all kidding (and arrows and cupids) aside, these issues get complicated if you are the seller of these items. Buyers tend to have to grin and bear the imposition of sales tax. But the responsibility to collect is on the seller of taxable items. It's so important to get that right, because when you sell directly to consumers, you really only have that one opportunity to get the sales tax collection right. If the seller doesn't collect sales tax correctly, the burden of the tax itself can be shifted to the seller. That's often where clients seek our advice!
Do You Have Other Sales Tax Questions?
Since state tax legislation is constantly changing, working with an experienced team of state tax consultants like Miles Consulting Group is a great way to ensure you are meeting 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.
What's a "Reverse Sales Tax Audit"? And Why do you Care?
Thank you to our newest team member, Greg Weston, for contributing this month’s blog. Greg has many years of experience in finding sales tax refunds for companies, and putting that money back in their pockets! Read below to find out about reverse sales tax audits and to see if your company might be a candidate.
When a taxing authority performs a sales and use tax audit, their primary audit objectives are to review the taxpayer’s purchases and assess tax on underreported purchases subject to use tax and on the sales side, to review the taxpayer’s claimed exempt sales and assess tax on unsupported claimed exempt sales. While the principles discussed below can be applied in part to sales, the focus here will be on the purchase side of the review. The objective of such a review is for a company to determine before or during an audit whether they may have some errors in their favor that might lead to a refund.
Everything You Need To Know About The 1099-K 2022 Tax Code Changes
Selling handmade products on Etsy, online tutoring and web editing are a few side hustles many turned to throughout the COVID-19 pandemic. As a result of being laid off or not feeling safe to return to work, many people started the small businesses they always dreamed of. Consequently, the use of mobile payment apps such as Venmo or PayPal grew, as it was a convenient way to receive payment. In 2020 alone there were 900 million new mobile payment app users worldwide. One of the upsides of using these apps is the ability to receive payment and move the money into a personal account immediately.
Another plus? In the past, you weren't required to report your earnings via mobile payment apps to the IRS unless you had at least 200 transactions exceeding $20,000 in total value. But starting January 1, 2022, if you make over $600 in transactions on goods and services, you will need to report your earnings for next year's filings in 2023. If you exceed this goods and services threshold, you will receive a 1099-K form.
The change to the tax code was signed into law as part of the American Rescue Plan Act, the Covid-19 response bill passed March 2021.
What Is The 1099-K Form?
According to the IRS website, the 1099-K form is an IRS information return used to report certain payment transactions to improve voluntary tax compliance.
Essentially, this form is a way for online retailers to submit their earnings. The company, such as Paypal or Venmo, will fill out a form on your behalf and you will get a copy as well.
While this is a federal tax code change, individual states have different reporting requirements.
Examples Of State's 1099-K Current Requirements
- Requires payment settlement entities, electronic payment facilitators or third parties that have contracted with a payment settlement entity to file the form with the Florida Department of Revenue within 30 days after the corresponding federal filing is due.
- Everyone who files a 1099-K must electronically file a copy with the Georgia Department of Revenue on or before the date it is due to the IRS.
While this is a change for the 2023 tax filing season, some states have already started implementing it. States that have already implemented the new tax code change include: Arkansas, Illinois, Maryland, Massachusetts, Mississippi, Missouri, New Jersey, Vermont, Virginia and Washington D.C.
Remember to stay ahead of your filing deadlines and liabilities, as tax legislation changes often. We frequently share tax code updates on our blog so you can stay up to date.
Do You Need Help With Your Tax Obligations?
Now is the time to get ahead on your state tax obligations, and working with an experienced team of tax consultants like Miles Consulting Group is a great way to ensure you are meeting all of your requirements. 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.
Focus on Vermont
The gold standard for fall foliage takes us to Vermont. With 75% of the state covered in forest and having the most land coverage of maple trees per capita, Vermont’s foliage season is the most vibrant. With its thousands of acres of alpine terrain, it is a popular destination for snowboarders and skiers. Trout fishing, lake fishing, ice fishing and hunting are also popular pastimes for residents and tourists alike. In the fall, hikers can catch some unforgettable views.
Vermont is attractive for more than just its environment. Vermont is also known for the manufacture and sale of artisan foods, fancy foods and novelty items such as Cabot Cheese, the Vermont Teddy Bear Company (where visitors can build their own Teddy Bear), Burton Snowboards and Ben and Jerry’s Ice Cream (where tours end by tasting your favorite flavor).
Goodbye 2021... Hello 2022!
Here we are at the end of December and this is the last blog of the year. I’m sure it’s cliché to ask “where has this year gone?”, but I’m going to do it anyway. 2020 introduced us to the complexities of working in a pandemic environment. And 2021 helped to reinforce that we can (fortunately or unfortunately) continue to do our jobs, network, and garner new clients without leaving the comfort of our homes. Maybe that’s why it feels as though the year sped by so quickly.
As we head into 2022, I like to reflect both on the year just ending, as well as to look forward into the new year and what it has to offer.
2021 Business And State Sales Tax Roundup: What Were The Big Changes?
Can you believe 2021 is almost over? Neither can we. While 2021 was somewhat calmer than the tumultuous year that was 2020, there were still plenty of important new state and business sales tax legislation and changes. While we do share updates on our blog regularly, in this article we want to provide you with an all-in-one roundup of a few important tax updates from this past year.
Missouri And Florida Implement Economic Nexus
If you follow our blog, you know that we frequently share updates regarding economic nexus as a result of the June 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc.
On April 19, 2021, Florida's governor signed S.B. 50 into law, making Florida one of the last states to adopt economic nexus for sales tax.
In June 2021, Missouri became the final state with a statewide sales tax to enact economic nexus legislation when Gov. Mike Parson signed SB 153 & 97.
How Else Has Economic Nexus Legislation Been Updated?
Several states have either reduced or removed the sales or transaction thresholds for triggering nexus in their states within the last year (or have otherwise expanded the nexus net), including Arizona, Illinois and Tennessee. It's possible that these changes in nexus helped to increase states revenue streams after losses in 2020 due to the pandemic. Even a little tweak can have significant ramifications!
SaaS Taxation Legislation Changes
We routinely share SaaS taxation updates in our weekly blog articles, as it is a fairly new topic and an issue we help many of our clients with.
In 2021, Maryland began to tax SaaS and digital products. Up until March 14, when House Bill (HB) 932 was enacted, digital products in the state were not subject to sales and use taxation.
Now, e-books, songs and movies along with SaaS are subject to these taxes.
Taxation Of Remote Workers
COVID-19 completely changed the way that we work, and for a lot of people working from home has become their new reality. As a result, the taxation of remote workers has changed in the last two years. Typically, remote workers that live in a different state than where they work can create nexus (the amount of contact from a company needed to be obligated to collect sales tax in that state).
Throughout the pandemic, however, many states have chosen not to assert nexus on the companies whose employees were working remotely due to the pandemic.
Check out our previous blog article on the subject to see some of the specific updates that happened in 2021 regarding taxation of remote workers.
Do You Need Help With Your Sales Tax Compliance?
Now is the time to get ahead with your sales tax compliance. Since state tax legislation is constantly changing, working with an experienced team of tax consultants like Miles Consulting Group is a great way to ensure you are meeting 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.
Focus on Indiana
This month we travel to the Crossroads of America, the Midwest state of Indiana. It is known for its farmland and renowned auto race, the Indianapolis 500, held at the Indianapolis motor speedway. In the capital, Indianapolis, theatres and galleries line Massachusetts Avenue. The city’s downtown is home to the iconic Soldiers and Sailors Monument, the Canal Walk promenade and the Indianapolis Museum of Art and its wide-ranging collections.
Various indigenous peoples inhabited Indiana for thousands of years. Indiana received its name because the state was largely possessed by native tribes even after it was granted statehood. Since then, settlement patterns in Indiana have reflected regional cultural segmentation in the Eastern United States; the state’s northernmost tier was settled primarily by people from New England and New York, Central Indiana by migrants from the Mid-Atlantic states and adjacent Ohio, and Southern Indiana by settlers from the Upland South, particularly Kentucky and Tennessee.
In Northwest Indiana, there are various sand ridges and dunes, some reaching nearly 200 feet in height. These are located along the Lake Michigan shoreline and also inland to the Kankakee Outwash Plain. Southern Indiana is characterized by valleys and rugged, hilly terrain, contrasting from much of the state. Here, bedrock is exposed at the surface and isn’t buried in glacial till further north. Because of the prevalent Indiana limestone, there are numerous caves, caverns, and quarries in the area.
Business Climate
The state’s five leading exports are motor vehicles and auto parts, pharmaceutical products, industrial machinery, optical and medical equipment, and electric machinery. Northwest Indiana has been the largest steel producing center in the U.S. since 1975 and accounted for 27% of American-made steel in 2016.
Indiana is home to the International headquarters and research facilities of pharmaceutical company Eli Lilly in Indianapolis, the state’s largest corporation. Evansville is also home to the world headquarters of Mead Johnson Nutritionals. Overall, Indiana ranks fifth among all U.S. States in total sales and shipments of pharmaceutical products and second highest in the number of biopharmaceutical related jobs.
Along with corn, soybeans are also a major cash crop. Other crops include melons, tomatoes, grapes, mint, popping corn and tobacco in the southern part of the state. Most of the original land was not prairie and had to be cleared of deciduous trees. Many parcels of woodland remain and support a furniture-making sector in the southern portion of the state.
Tax Climate
The top individual income tax rate is 3.23% and the top corporate income tax rate is 5.5%.
Apportionment: Indiana taxpayers apportion income tax using a single-factor sales weighted formula.
Indiana has adopted market-based sourcing for sales of intangibles.
Sales Tax Structure
The state sales tax rate is 7%. The combined rate is also 7%.
Indiana has an economic nexus law where if an out of state seller sells $100,000 or 200 transactions worth of merchandise into the state, sellers need to collect and remit sales tax on those transactions to the state. Gross revenue from sales of tangible personal property, electronically delivered products, and services are included in the threshold. Exempt sales and exempt services are also included in the threshold. The threshold applies to transactions in the previous or current calendar year. This law went into effect on October 1, 2018.
Marketplace facilitators that make or facilitate sales into Indiana and meet the economic nexus thresholds of $100,000 in sales or 200 or more transactions in Indiana must collect and remit sales tax on all taxable sales made through the marketplace. This requirement also applies to lodging marketplaces. This law was enforced on July 1, 2019.
The sale or use of specified digital products is taxable, if the product is transferred electronically to an end user with the right of permanent use of the specified digital product and the right of permanent use is not conditioned upon continued payment. Indiana imposes sales tax on the sales of prewritten software delivered electronically. Sales of custom computer software delivered electronically are not subject to sales and use tax. Software as a service (SaaS) is not taxable in Indiana. How products are produced, sold and delivered is critical to determining the tax status.
Many states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. Indiana, however, does not currently have any scheduled sales tax holidays.
Our team at Miles Consulting Group is always available to discuss the specifics of your situation, whether in Indiana or other U.S. States, and help you navigate the complex tax structures arising from multistate operations. Call us to help you achieve the best tax efficiencies.
Random Facts
- The first long-distance auto race in the U.S. was held on May 30, 1911 at the Indianapolis Motor Speedway.
- Explorers Lewis and Clark set out from Fort Vincennes on their exploration of the Northwest Territory.
- Marcella Gruelle of Indianapolis created the Raggedy Ann doll in 1914.
- Indiana ships over 70 million tons of cargo by water each year, which ranks 14th among all U.S. states.
- In 1862, Richard Gatling, of Indianapolis, invented the rapid-fire machine gun.
- At one time, 12 different stagecoach lines ran through Indiana on the National Road (now U.S. Interstate 40).
- Indiana is the first state to have a chapel in its state capitol. It was built in memory of former first lady Beth Bowen.
- There have been six men from Indiana who have been elected vice president: Schuyler Colfax, Thomas A. Hendricks, Charles W. Fairbanks, Thomas Marshall, Dan Quayle and Mike Pence. They have earned Indiana the nickname “Mother of Vice Presidents.”
- The Indiana Dunes region on the shore to Lake Michigan provides habitats for many unusual plants, including prickly pear cactus, lichen mosses, bearberry and more than 20 varieties of orchids. Mount Baldy, the largest of the sand dunes, is a living dune that moves away from shore a few feet a year.
Axe The Food Tax: Eliminating Sales Tax On Groceries In Kansas
Kansas Gov. Laura Kelly announced in November her plans to introduce a bill to the Kansas legislature to "Axe the Food Tax" and completely eliminate sales tax on groceries in the state. Her plan is for the bill to be introduced during the 2022 legislative session.
Kansas is currently one of just seven states in the U.S. that fully taxes groceries. The current grocery sales tax rate is 6.5%, the second highest in the nation.
Keep reading to learn more about why the governor wants to axe the food tax and what this will look like for Kansas citizens.
The Negative Side Effects Of Grocery Sales Tax
While a grocery sales tax can lead to economic growth and more money for the state government, there can be negative effects for the citizens, specifically those in lower economic classes.
Sales tax on groceries can cause harm to citizens in the lowest income bracket since they usually spend more of their income on groceries to eat at home than higher income individuals and families.
According to an article from the Center on Budget and Policy Priorities, "The lowest-income fifth of families spend almost twice the share of their annual income on food at home that the highest-income fifth do: 10.3 percent versus 5.7 percent."
A study titled, "Putting grocery food taxes on the table: Evidence for food security policy-makers" found that states with a grocery tax tended to have a higher food insecurity rate.
While 10.9% of Americans are food insecure, 12.1% of Kansans are food insecure. The rate among Kansas children is 17.1%, while the national average is 14.6%.
Another study published in the Health Economic Review highlights the relationship between grocery sales tax and obesity, specifically throughout the pandemic. They estimate that the increased financial burden of obesity and diabetes rates resulting directly from grocery taxes is about $5.9 billion.
Also, though it may seem like getting rid of the grocery sales tax would lead to less money for the state, many people who live near the border in Kansas currently cross over to Missouri, Colorado or Nebraska to buy their groceries to avoid Kansas' high grocery tax, leading to less money being spent in the state. The new "Axe the Food Tax" legislation will help put an end to that, resulting in higher sales for companies that sell food in Kansas.
Kansas Governor's Plan For The State
Due to the negative aspects of a grocery sales tax, Gov. Kelly has stated she wants to completely remove the tax on foods in Kansas. With this cut the average four-person Kansas household should be able to save $500 or more a year.
Kansas lawmakers from both parties welcomed new revenue forecasts that project a $2.89 billion surplus to the state general fund as evidence the state can afford to exempt groceries from the state sales tax.
Gov. Kelly agreed that removing grocery sales tax shouldn't have too much of an effect on the state's budget.
"Thanks to the fiscally responsible decisions we made before and during the pandemic, we can cut the food sales tax and keep Kansas' budget intact."
Do You Need Help With Your Sales Tax Compliance?
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.
