The Official Website of the Louisiana Department of Revenue
Advance Sales Tax Repeal
BATON ROUGE , La. (October 13, 2008) - A significant change to Louisiana tax law takes effect on January 1, 2009, with the repeal of the Advance Sales Tax.
The Advance Sales Tax applies to retail dealers who purchase articles of tangible property for resale to the public.
Under the current law, dealers that do not qualify for exemption from the advance sales tax requirement are required to pay state sales tax on purchases for resale and then claim credit for the sales taxes paid on line 12 of the state sales tax return, Form R-1029.
Beginning January 1, 2009, all purchases for resale will be exempt from sales tax and line 12 will be removed from the sales tax return beginning with the July 2009 return.
To prepare for this transition, the Louisiana Department of Revenue (LDR) will begin reviewing sales tax accounts in October to identify retail dealers that will be affected by the repeal of the Advance Sales Tax. LDR will mail letters to the retail dealers that are identified to confirm their retail dealer status and instruct them regarding the documentation that must be provided to their vendors for their resale purchases to be exempt from the state sales tax. Retail dealers that do not receive a confirmation letter before December 31, 2008, should contact the LDR Taxpayer Services Division at 225-219-7356 to request certification. Additional documentation from the taxpayer may be required to verify status as a retailer.
The Louisiana Resale Certificate, Form R-1042, is posted on the LDR web site, www.revenue.louisiana.gov. The certificate can be completed online and printed as needed. Retail dealers must provide resale certificates to their vendors to certify that the purchases are for resale. Retail dealers are reminded that the resale certificate may only be used to purchase items for resale. Purchases for use or consumption are still taxable and the dealer is required to pay the sales tax at the time of purchase or report the purchase on line 2 of the sales tax return to be paid with the sales tax return remittance.
Louisiana Revised Statute 47:306(A)(6) allows dealers to claim credit for Advance Sales Tax paid before the repeal of La. R.S. 47:306(B) on January 1, 2009. Advance tax paid after the repeal must be refunded by the vendor. To allow time for the change, the Advance Sales Tax credit, line 12, will remain on the sales tax return until July 1, 2009, and dealers will be able to claim the credit for state sales tax paid on purchases for resale billed during the transition period. However, retail dealers should provide resale exemption certificates to their vendors as soon as possible. After July 1, 2009, retail dealers that paid advance sales tax to their vendors will be required to obtain a refund from their vendors for the tax paid in error.
Dealers that register a sales tax account after the Advance Sales Tax credit repeal will be required to provide their North American Industry Classification System (NAICS) code as proof of their qualification as a retail dealer. Dealers are encouraged to register using LDR’s Online Registration system for fast and accurate processing of their sales tax registration and retail designation.
For more information about the advance sales tax repeal, see the Advance Sales Tax Repeal FAQs.
