Louisiana has a sales tax at both the state and the parish (county) level. The state rate is 4%, while the parish rates vary. In most states, the locals mirror the exemptions provided by the state, which makes compliance a bit easier. Louisiana is not one of these states. The parishes in Louisiana follow the exemptions provided at the state level for most items. However, there are several significant areas where treatment is not uniform and the parishes’ tax items that are otherwise exempt at the state level.
Parishes’ Local Tax vs. State Sales Tax for Prescription Drugs and Other Items
In general, food for home consumption and prescription drugs are exempt at the state level but taxable at the parish level. In fact, certain parishes may also exempt or place a special reduced rate on these items. This represents a compliance challenge, especially when a parish with special food and prescription drug rules increases its general tax rate and an organization selling these items needs to determine whether the rate increase applies to these items with special rules.
Sovos Compliance monitors for these rate changes on a monthly basis and also determines whether these changes have an impact on food for home consumption and prescription drugs across all parishes in Louisiana, greatly reducing the compliance burden on your organization.
Sales Tax Holidays in the State of Louisiana: Goods, Guns and Getting Ready for Hurricane Season
Another significant area where the taxability determinations between the state and the parishes differ are sales tax holidays. Louisiana currently has three sales tax holidays: a hurricane preparedness holiday in May, an August holiday that covers most items of tangible personal property not for business use and finally a September Second Amendment holiday that exempts purchases of firearms, ammunition and hunting supplies.
To make matters even more complicated, the rules for parish participation differ between the holidays. The Second Amendment holiday is the simplest; it applies at both the state and parish level. However, for the other two holidays, the parishes have to opt into the holiday if they would like to participate. Historically, only a handful of parishes have opted to participate in these holidays. Sovos Compliance monitors all of the Louisiana parishes for their participation in these holidays, ensuring that your organization remains compliant.
Local taxes pose a compliance challenge in many jurisdictions, and Louisiana has some unique issues that can be particularly tricky to navigate. The Tax Research Department at Sovos Compliance actively monitors the sales tax rates of the Louisiana parishes and the implications any rate changes have on specific products, ensuring that your organization is accurately collecting and reporting.