- What is the effective date of the advance sales tax repeal?
Effective January 1, 2009, Revised Statute 47:306(B) will be repealed and resale dealers will no longer be required to pay state sales tax on tangible personal property purchased for resale.
Resale dealers will not be required to apply for a sales tax exemption certificate and “W” numbers will no longer be issued or renewed. Dealers that purchase items for resale will be required to provide their vendors with a Louisiana Resale Certificate, Form R-1042, to certify that the items being purchased are for resale and no sales tax will be charged.
- How will the advance sales tax repeal affect wholesale dealers?
Wholesale dealer accounts that had been issued "W" number sales tax exemption certificate will be updated and identified as "Resale" dealer. On January 1, 2009, the following changes will be in effect:
- Wholesale dealers will begin using the Louisiana Resale Certificate, Form R-1042 and should provide the certificate to their vendors to purchase items for resale without being charged the state sales tax.
- The resale certificate, Form R-1042, will replace the old "W" number exemption certificate, which will no longer be issued or renewed.
- The resale certificate may only be used to purchase items for resale. Purchases for use or consumption are still taxable and the wholesale dealer must pay the sales tax at the time of purchase or report the purchase for use on Line 2 of the sales tax return, Form R-1029 and pay the use tax with the sales tax return payment.
- Wholesale dealers will begin accepting the resale certificates from their retail dealer customers. Copies of the certificates must be maintained in their customer files as proof of exemption.
- How will the advance sales tax repeal affect retail dealers?
Effective January 1, 2009, all retail dealers will be allowed to purchase tangible personal property for resale without paying the state sales tax.
- Retail dealers will begin using the Louisiana Resale Certificate, Form R-1042, and should provide the certificate to their vendors to purchase items for resale without being charged the state sales tax.
- If the retail dealer previously qualified for a "W" number exemption certificate, the resale certificate, Form R-1042, will replace the old exemption certificate, which will no longer be issued or renewed.
- The resale certificate may only be used to purchase items for resale. Purchases for use or consumption are still taxable and the retail dealer must pay the sales tax at the time of purchase or report the purchase for use on Line 2 of the sales tax return, Form R-1029 and pay the use tax with the sales tax return payment.
- The sales tax accounts of retail dealers that previously qualified for a "W" number or were identified by LDR as a reseller and mailed notification of their resale dealer status have been updated and identified as a "Resale" dealer.
- How should resale dealers register for new sales tax accounts?
Resale dealers that are registering new sales tax accounts will be required to provide their North American Industry Classification System (NAICS) code as confirmation of their qualification as a resale dealer. NAICS codes are usually issued by the IRS, but the Louisiana Workforce Commission may also issue a code when registering the dealer for unemployment taxes. Resale dealers that do not have a NAICS code, should contact LDR to have a NAICS code assigned based on the description of the dealer’s business activities.
Once the dealer is registered, a sales tax certificate and letter will be mailed to the dealer to confirm their resale dealer status. The confirmation letter will instruct the dealer to use the Louisiana Resale Certificate, Form R-1042, to provide to their vendors to purchase items for resale without being charged the state sales tax.
If the dealer fails to properly identify their resale business during the registration process, the dealer will not receive instructions on use of the Louisiana Resale Certificate, Form R-1042. Dealers that were not properly registered as a resale dealer should contact the LDR Taxpayer Services, Sales Tax Section at (225) 219-7356 or by email at salestaxinquiry@la.gov to request a correction to their account registration.
- Will there be a transition period for the repeal of the advance sales tax?
Yes. To allow time for the change the advance sales tax credit line will remain on the sales tax return, Form R-1029, until July 1, 2009. This will allow resale dealers to claim the credit for state sales tax paid on purchases for resale billed during the transition period. However retail dealers should provide a Louisiana Resale Certificate, Form R-1042, to their wholesale vendors beginning January 1, 2009, and not pay the sales tax to their vendors on resale purchases. After July 1, 2009, resale dealers that pay advance sales tax on resale purchases will be required to obtain a refund of the state sales tax from their wholesale vendors.
