New sales tax rules for wine shipped directly to Louisiana consumers
Starting July 1, 2020, Louisiana will enforce a new sales tax collection requirement for certain out-of-state wine sellers shipping directly to consumers (DTC) in Louisiana. It applies to out-of-state wine manufacturers, producers, and retailers of still or sparkling wine (out-of-state wine sellers) with more than $100,000 in sales or 200 transactions in the state in the current or previous calendar year.
The $100,000 sales/200 transactions threshold is part of Louisiana’s economic nexus law, which takes effect July 1, 2020, and applies to all remote sellers, not just out-of-state wineries.
What’s changing for DTC wine sellers
Although new collection requirements take effect July 1, 2020, out-of-state wine sellers have been required to register and collect applicable state sales tax on DTC sales of still and sparkling wine in Louisiana since July 1, 2016.
No out-of-state winery is required to collect local sales taxes prior to July 1, 2020. However, out-of-state wineries may opt to voluntarily collect local sales tax as a courtesy to customers, who would otherwise be required to remit applicable local use tax directly to the local tax authority. Those wishing to do so can apply for a Direct Marketer Sales Tax Account; direct marketers collect and remit a flat 8.45% combined state and local sales tax on all sales into the state, rather than the varying combined rates in effect in each jurisdiction.
Beginning July 1, 2020, out-of-state wineries meeting either the $100,000 sales or 200 transactions threshold are required to collect applicable local sales or use tax in addition to the state sales tax. They cannot collect the flat 8.45% rate collected by direct marketers.
Out-of-state wineries with less than $100,000 in Louisiana sales and fewer than 200 transactions in the state must continue to collect state sales tax but are not required to collect local sales tax. They may opt to do so (details below).
What out-of-state DTC wine sellers need to do
As of July 1, Louisiana has different requirements for out-of-state DTC sellers with economic nexus and out-of-state sellers without economic nexus.
Out-of-state wine sellers with economic nexus
Out-of-state sellers that have economic nexus with Louisiana are required to register with the Louisiana Sales and Use Tax Commission for Remote Sellers (a branch within the Louisiana Department of Revenue) and collect state sales tax as well as all applicable local sales taxes, which vary by jurisdiction. The commission will serve as the single remote sales tax collecting agency.
An out-of-state seller has economic nexus if, in the current or preceding calendar, it has:
- More than $100,000 in gross revenue from sales of tangible personal property, products transferred electronically, or services; or
- At least 200 separate transactions of tangible personal property, products transferred electronically, or services
Any out-of-state seller currently registered as a direct marketer is no longer permitted to collect the flat combined rate of 8.45% if its sales into Louisiana exceed either of the economic nexus thresholds, but must instead register as a remote seller through the commission.
Out-of-state wine sellers without economic nexus
There are two options for out-of-state sellers whose sales into Louisiana are below the $100,000 sales/200 transactions threshold (i.e., out-of-state sellers that don’t have economic nexus with Louisiana):
- Option 1: Collect state sales tax only
- Option 2: Apply for a Direct Marketer Sales Tax Account and voluntarily collect and remit the flat 8.45% rate on all sales into Louisiana.
Out-of-state sellers currently registered as a direct marketer may continue to collect the flat 8.45% rate and remit to the Louisiana Department of Revenue, provided their sales into Louisiana are under the economic nexus thresholds.
No seller with a physical presence in Louisiana, including employees or sales representatives, is permitted to register as a direct marketer.
Additional details are provided in this Remote Sellers Information Bulletin, which regrettably doesn’t yet address the plight of out-of-state wine sellers.
What you need to sell directly to consumers in Louisiana
An out-of-state wine seller must hold a valid wine producer’s, manufacturer’s, or retailer’s license in the state of its domicile in order to sell into Louisiana. Additionally, before selling DTC in the Pelican State, an out-of-state seller must:
- Obtain a Direct Wine Shipper Permit from the Louisiana Office of Alcohol and Tobacco Control (ATC)
- Register with the Louisiana Department of Revenue for excise sales tax and sales and use tax certificates
The annual fee for an out-of-state wine seller to make direct sales into Louisiana is $1,000; the fee for out-of-state manufacturers or wine producers to make direct sales into Louisiana is $150. Additional details are available from Wine Institute and the Louisiana Department of Revenue.
Additional guidance forthcoming
As of this writing, it’s unclear whether wholesale sales of wine in Louisiana count toward the $100,000 sales/200 transactions threshold. However, exempt sales of other goods and services are not included in Louisiana’s economic nexus threshold.
The Louisiana Sales and Use Tax Commission for Remote Sellers has promised to provide additional information. Whether it will address issues specific to out-of-state wine sellers remains to be seen. We’ll provide updates here if and when Louisiana provides additional guidance, including the new forms and process for filing.
Read more about Louisiana’s new collection requirement for out-of-state sellers in New Louisiana sales tax collection requirements for remote sellers and marketplace facilitators.
Avalara can help clients transition to new collection and reporting requirements and will be ready to calculate and remit the appropriate sales taxes for these new rules on July 1. Find out how Avalara for Beverage Alcohol can help with your compliance challenges.
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