La. Admin. Code tit. 61 § I-4303
Current through Register Vol. 50, No. 5, May 20, 2024
Section I-4303 - Imposition of TaxA.1.R.S. 47:302(A)imposes a tax at the rate of 2 percent upon the sale at retail or the use, consumption, distribution or storage for use or consumption in this state of each article of tangible personal property, as each of those terms are defined in R.S. 47:301. R.S. 47:321(A) and R.S. 47:331(A) each impose an additional 1 percent tax on the same basis, making the combined state sales tax rate 4 percent. If Louisiana sales tax has been paid upon the transfer of title to tangible personal property, then there will be no tax on the use, consumption, distribution, or storage for use or consumption of the item in this state by the purchaser, since R.S. 47:302 provides that there shall be no duplication of the tax.2. Each and every item of tangible personal property sold at retail in this state is subject to the tax imposed by this Chapter unless a specific exemption is set forth in the statute. The tax is computed on gross sales and must include each and every retail sale. When tangible personal property is used, consumed, distributed, or stored for use or consumption in this state on which, for any reason whatsoever, no Louisiana sales tax has been paid, then the tax will be imposed on such use, consumption, distribution or storage. The tax paid under this provision is commonly referred to as use tax as distinguished from sales tax. R.S. 47:302(A)(2) provides that the use tax will be 2 percent of the cost price of each item or article of tangible personal property subject to the use tax, and R.S. 47:321(A) and R.S. 47:331(A)provide for an additional 2 percent. It is important that R.S. 47:301(3) and the regulation issued under LAC 61:I.4301.C.Cost Price be thoroughly analyzed prior to arriving at the basis upon which the use tax will be computed.B. Tax on Lease or Rentals 1. General Rule a. Revised Statute 47:302(B) provides that the Louisiana lease tax shall be paid on leases "within this state" and R.S. 47:301(7) defines lease or rental as "the leasing or renting of tangible personal property and the possession or use thereof by the lessee or renter, for consideration, without transfer of the title of such property." Therefore, the Louisiana lease tax is due when a lessee possesses or uses leased tangible personal property within Louisiana, regardless of where the lessor and lessee entered into the lease contract or where the lessor transferred possession of the leased property to the lessee.b.Lease also means rental for the purposes of this Subsection.c. Lease payments on leases within Louisiana are subject to the tax rate provided in Title 47 of the Revised Statutes. The tax rate must be applied to each payment, whether made monthly or according to some other schedule.d. A lessor of leased property, as a dealer and agent for the Department of Revenue (department), shall collect the lease tax from the lessee of the leased property. The lessor must report lease payments on a cash-receipt basis, as provided in R.S. 47:306(A)(2).e. Gross proceeds derived from the lease of tangible personal property within Louisiana are subject to the lease tax whether the leasing of tangible personal property is the established business of the taxpayer or is only incidental to the taxpayer's established business. Operating expenses and maintenance costs for keeping leased property in repair cannot be deducted from gross proceeds in arriving at the taxable base.2. Exceptions to the General Rule a. Revised Statute 47:305(E)(1) provides that: "nor is it the intention of this Chapter (Chapter 2 of Title 47 of the Revised Statutes) to levy a tax on bona fide interstate commerce." i. The lease tax imposed under R.S. 47:302(B) is a tax levied under Chapter 2 of Title 47 of the Revised Statutes. Therefore, the lease tax is not due on the lease of tangible personal property for those periods of time that it is used in bona fide interstate commerce, whether the use in bona fide interstate commerce is in Louisiana or outside of Louisiana.b. If the lessee used the leased tangible personal property both in bona fide interstate commerce (whether within or without Louisiana) and in intrastate commerce in Louisiana, the lease tax is due only on the portion of the lease payments attributable to operational usage in Louisiana in intrastate commerce. What constitutes operational usage shall be based on industry custom and the type of property at issue (e.g., flight time, vehicle miles). If average operational usage in Louisiana intrastate commerce is equal to or less than 10 percent of total operational usage during a lease payment billing period, the leased property shall be deemed to be used exclusively in interstate commerce, and no lease tax shall be due for that period. Average operational usage in Louisiana intrastate commerce shall be determined by a ratio, the numerator of which is total Louisiana intrastate operational use, and the denominator of which is total operational use (both intrastate and interstate). If average operational usage in Louisiana intrastate commerce is equal to or greater than 90 percent of total operational usage during a lease payment billing period, the leased property shall be deemed to be used in Louisiana intrastate commerce, and lease tax shall be due on the entire lease payment for that period. Average operational usage in bona fide interstate commerce shall be determined by a ratio, the numerator of which is total bona fide interstate operational use, and the denominator of which is total operational use (both intrastate and interstate). Nothing in this Subparagraph shall be construed to prohibit the department from imposing a lease tax on leased property stored in Louisiana for use in intrastate commerce in Louisiana.c. The lease tax is not due if the leased property is leased for use and actually used in an offshore area beyond the territorial limit of Louisiana. In order for this exclusion to apply, the leased property may not be used within Louisiana and the lessee must complete an LGST-9B sales tax exemption certificate stating that the leased property will be used in a specific offshore area. The definition of use, for the purposes of Paragraph 2, is found in R.S. 47:301(4)(d)(ii).d. The department shall authorize lessees, who are registered with the department on a form to be provided by the department, and who used leased property in whole or in part outside Louisiana and/or in whole or in part in bona fide interstate commerce (whether within or without Louisiana), to issue exemption certificates to the lessors of the leased property for such use. A lessor receiving such an exemption certificate shall not be required to collect the lease tax for such leases, and lessees issuing such exemption certificates shall be responsible for reporting lease payments and paying the lease tax to the department for leases in accordance with the provisions of this regulation.3. Treatment of the Tax Levied by Local Taxing Authorities for Inter-jurisdictional Lease or Rental Transactions a. For the purpose of local sales or use tax levied upon the lease or rental of tangible personal property , the tax for the initial lease or rental period is due to the local taxing jurisdiction where the transfer of possession of the leased property occurs.b. For subsequent lease or rental periods, when there is no additional transfer of possession, the tax is due to the local taxing jurisdiction where the property is primarily located. The primary location of the property is that location designated by the lessee and made known to the lessor from records maintained in the ordinary course of business.c. Possession or use of the leased property in a local taxing jurisdiction where the property is not primarily located will subject the lessee to the taxes imposed by that local taxing jurisdiction . However, a credit will be allowed for the lease period for any tax previously paid to another local taxing authority under the provisions of Subparagraphs a or b of this Paragraph. It is the lessee's responsibility to report any additional tax due.C.R.S. 47:302(C) imposes a tax of 2 percent of the total amount paid or charged for furnishing of the selected services set forth in R.S. 47:301(14). In addition to the 2 percent tax levied under the provisions of R.S. 47:302(C), an additional 2 percent tax is levied under the provisions of R.S. 47:321(C) and R.S. 47:331(C). Only those services defined as sales of services under the provisions of R.S. 47:301(14) are subject to the tax. In the case of all three tax imposition sections, only those services which are performed within the state of Louisiana are subject to the tax. Services performed outside the limits of the state, whether in another state or in a disputed zone offshore which is ultimately held to be outside the boundary of the state of Louisiana even though the normal base of operations may be within the state of Louisiana, are not subject to the tax.D. The taxes imposed by R.S. 47:302 and by R.S. 47:321 and R.S. 47:331 are in addition to all other taxes, whether levied in the form of an excise tax, a license tax, a privilege tax, or a gross receipts tax, and shall be in addition to taxes levied under the provisions of Chapter 3 of Subtitle II of Title 47 which is the Louisiana occupational license tax law.La. Admin. Code tit. 61, § I-4303
Promulgated by the Department of Revenue and Taxation, Sales Tax Division, LR 13:107 (February 1987), amended LR 19:1033 (August 1993), amended by the Department of Revenue, Sales Tax Division, LR 23:1703 (December 1997), amended by the Department of Revenue, Policy Services Division, LR 30:2864 (December 2004).AUTHORITY NOTE: Promulgated in accordance with R.S. 47:302, R.S. 47:337.2, and R.S. 47:1511.