Louisiana's tax nexus rules determine when businesses must register for sales tax, income tax, and employment taxes in the state. Companies domiciled or incorporated in Louisiana automatically have nexus and must register upon formation, while out-of-state businesses trigger registration requirements by crossing specific thresholds.
Understanding these thresholds is crucial because crossing them creates immediate compliance obligations and potential penalties for non-registration. Louisiana uses different triggers for different tax types: economic thresholds for sales tax, factor-presence tests for income tax, and employee-based triggers for employment taxes. Each operates independently, so you could owe one type of tax without owing others.
Louisiana eliminated the 200-transaction threshold in August 2023, simplifying economic nexus to focus solely on dollar amounts. The Department of Revenue adjusts income tax factor thresholds annually for inflation, requiring businesses to monitor updated amounts each year.
Louisiana establishes sales tax nexus through economic activity thresholds and physical presence triggers. Once either threshold is crossed, businesses must register and begin collecting Louisiana sales tax immediately.
Louisiana's economic nexus rule requires remote sellers with $100,000 or more in retail sales to Louisiana customers during the previous or current calendar year to register for sales tax. Collection of Louisiana sales tax must begin after registration is approved and within 60 days of meeting the economic nexus threshold, or upon notification from the Commission.
This threshold includes retail sales of tangible personal property, digital products, and taxable services, but excludes wholesale transactions with valid resale certificates. Sales made through registered marketplace facilitators don't count toward individual sellers' thresholds if the facilitator is already collecting Louisiana tax on those transactions. Marketplace facilitators themselves must register if they exceed $100,000 in gross revenue from retail sales.
Physical presence in Louisiana creates an immediate sales tax nexus regardless of sales volume. Activities establishing physical presence include:
Even temporary physical presence can trigger nexus requirements. Sales representatives attending trade shows or employees making service calls can establish a physical nexus requiring immediate registration.
Businesses meeting Louisiana sales tax nexus requirements must register with the Louisiana Sales and Use Tax Commission for Remote Sellers within 30 days of exceeding thresholds. Registration occurs online through the state's remote seller portal at remotesellers.louisiana.gov.
Once registered, businesses must collect Louisiana state and local sales tax at the correct rates for customer locations. Filing frequency is typically monthly or quarterly, depending on tax volume, with returns and payments due according to assigned schedules.
Louisiana subjects out-of-state businesses to corporate income tax when they exceed specific factor-presence thresholds, creating filing obligations regardless of whether tax is ultimately owed.
Louisiana uses a factor-presence standard where out-of-state businesses establish substantial nexus by exceeding any of these thresholds:
The 25% rule captures smaller businesses whose Louisiana activity represents a significant portion of total operations, even when absolute dollar amounts fall below the specific thresholds. These thresholds adjust annually based on Consumer Price Index changes.
Federal law may protect some out-of-state sellers from Louisiana income tax even if they exceed factor-presence thresholds. Public Law 86-272 protection applies only to soliciting orders for tangible personal property if orders are approved and shipped from outside Louisiana. However, this protection doesn't apply to franchise tax obligations, which can attach even when income tax is protected.
Businesses with Louisiana income tax nexus must file Form CIFT-620 annually, regardless of whether tax is ultimately owed. LLCs typically operate as pass-through entities unless they elect corporate tax treatment. Returns are due by the 15th day of the fourth month following year-end, with estimated payments required quarterly.
Employment tax nexus in Louisiana is established immediately when any employee performs work within the state, creating withholding tax obligations and unemployment insurance requirements regardless of other business activity levels.
Having any employee work from a Louisiana location, whether full-time, part-time, seasonal, or temporary, establishes an immediate employment tax nexus. This includes remote employees working from Louisiana addresses and temporary assignments where employees perform services within the state of Louisiana.
The employment nexus threshold has no dollar amount or time period requirements. A single day of work by one employee in Louisiana can trigger registration obligations.
Louisiana employment nexus requires multiple registrations:
Louisiana's tax framework captures modern business activities, including digital products, cloud services, and remote workforce arrangements.
Digital products and Software-as-a-Service offerings are subject to Louisiana sales tax as taxable digital goods and services. The $100,000 economic nexus threshold applies to all retail sales, including electronically delivered software, streaming services, and cloud-based applications delivered to Louisiana customers.
Remote employees working from Louisiana locations create both employment tax nexus (immediate upon hiring) and potential income tax nexus if Louisiana payroll exceeds $50,000 annually or represents 25% of total company payroll.
Sales through registered marketplace facilitators don't count toward individual sellers' economic nexus calculations if the facilitator is already collecting Louisiana tax. However, sellers should verify the facilitator registration status and maintain records to support the exclusion of facilitated sales.
Additionally, drop-shipping arrangements involving Louisiana fulfillment centers establish physical presence, triggering immediate sales tax obligations.
Crossing Louisiana's tax or employment nexus thresholds may also result in the need for foreign registration with the Secretary of State. Although Louisiana doesn't have specific secretary of state nexus thresholds, states are more likely to consider a company as "doing business" if it's already paying taxes there. Understanding tax nexus thresholds helps identify when Secretary of State registration may also become necessary.
Once any Louisiana nexus threshold is crossed, immediate registration and ongoing compliance become mandatory, with penalties and interest accruing from the date nexus was established.
Louisiana requires detailed documentation supporting nexus determinations, including sales data separating Louisiana retail sales from wholesale and marketplace-facilitated transactions, payroll registers identifying employee work locations, property records documenting Louisiana assets and valuations, and apportionment supporting documentation for income tax factor calculations.
Louisiana imposes substantial penalties for late registration and non-compliance across all tax types. Interest accrues from the date taxes were originally due, and the Department of Revenue can assess back taxes for periods when nexus existed without proper registration.
The state offers voluntary disclosure programs that may limit lookback periods and reduce penalties for businesses that proactively address past exposure before being contacted by an auditor.
Discern provides comprehensive registered agent services and automated compliance tracking to ensure your Louisiana obligations are met without administrative burden. Our platform handles foreign registrations and monitors compliance requirements across all jurisdictions where you operate.
Ready to streamline your Louisiana compliance requirements? Book a demo with Discern today.
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