Louisiana increases sales tax kickback to timely filers

Louisiana is one of close to 30 states that encourage businesses to file and remit sales tax on time by allowing vendors to keep a portion of the tax collected each month. The amount varies by state and is subject to change. Effective August 1, 2020, Louisiana’s vendor compensation is increasing.

The vendor compensation rate in the Pelican State is currently 0.935%. However, since a portion of the state sales tax (0.45%) isn’t eligible for vendor compensation, the Louisiana Department of Revenue advises taxpayers to calculate the discount using a rate of 0.84% (see Sales Tax Return — General Instructions, Line 10). The total compensation for a dealer may not exceed $1,500 per calendar month.

Come August 1, Louisiana’s vendor compensation jumps to 1.05%. The $1,500 cap remains unchanged, though the legislature considered decreasing it to $1,200. The Department of Revenue has yet to update sales tax return instructions to reflect the change.

This change is due to the enactment of House Bill 11 during the 2020 First Extraordinary Session of the Louisiana Legislature. According to the bill’s fiscal note, it’s expected to reduce sales and use tax collections in the state by approximately $2.1 million during the first fiscal year, and by roughly $2.3 million in subsequent years. It’s not a lot, but it’s money that could give a sorely needed boost to businesses struggling from the impact of the coronavirus (COVID-19).

Learn more about vendor discounts for timely filing in other states.

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