New sales tax rate goes into effect Sunday, July 1

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Effective July 1, Louisiana’s overall state sales tax rate decreases from 5 percent to 4.45 percent. The new rate, enabled by House Bill 10 of the 2018 Third Extraordinary Session of the Louisiana Legislature, is to be levied upon the sale at retail, the use, the consumption, the distribution and the lease or rental of an item of tangible personal property; and upon the sale of services. Local sales tax administrator Jerry McWherter said the biggest challenge for businesses is getting thier computers and cash registers reset to the new rate with only a short window to do so.

“The local sales tax rate does not change, it remains at 5.5 percent. When adding the new 4.45 percent, you will now be paying 9.95 percent on your purchases,” he said. Any dealer that charges a 5 percent state sales tax rate on or after July 1 must remit the excess collected tax to the Louisiana Department of Revenue. Most businesses will contact their computer service providers to make the change, however small business owners utilizing cash registers may need assistance to recalibrate the tax rate. McWherter said the total tax rate of 9.95 percent in Natchitoches will have hurdles of its own.

CS&M Storage

“On a $10 purchase, how do you pay 99 and a half cents in tax?” That does make for a reason to ponder the problem. Will retailers round up the half-penny? If they do, then they are essentially charging the full 5 percent and will have to repay that half cent to the state.

Also beginning July 1, a state sales tax rate of 2 percent is to be levied for the sale at retail, the use, the consumption, the distribution, and the storage to be used or consumed of steam, water, electric power or energy, natural gas or other energy sources for non-residential use (“business utilities”).

The Louisiana Department of Revenue has issued Revenue Information Bulletin 18-016 to provide an explanation of the provisions of HB 10.

Link to bulletin: Revenue Information Bulletin 18-016