Louisiana Department of Revenue Explains Sales Tax Cap for Boats Registered in the State

The Louisiana Department of Revenue (the “Department”) published Revenue Information Bulletin 25-024, which clarified the requirements for the newly enacted partial sales tax exemption for boats registered in the state. Under Revised Statute § 47:305.23, boats registered in Louisiana with a combined state and local sales tax due exceeding $20,000 will be able to cap the total liability at $20,000. For the cap to apply, the tax must be paid within 90 days of purchase or importation into Louisiana.

The Department further clarified that “only those accessories that are attached to the boat at the time of purchase are included in the sales prices for the purpose of determining whether the threshold has been met.” The Department lists examples of accessories and items not to be included for purposes of determining the cap on sales tax:

• Accessories that are not attached to the boat at the time of purchase, such as ladders, anchors, rod holders, and fish finders.
• General accessories such as gas cans, fishing poles, wake boards, life jackets, fire extinguishers, flares, dock line/rope, and boat covers.
• Trailers.

If the combined state and local sales tax owed exceeds $20,000, the dealer should not charge or collect sales tax as part of the transaction. Instead, the dealer must include the statement “Subject to Sales Tax Cap” on the receipt or invoice and report the sales as exempt on their sales tax return using code 1331 on Schedule A-1. Additionally, the dealer must advise the purchaser to self-report and pay the state and local sales tax within 90 days using Form 1331, Watercraft Sales Tax Payment Certification. All purchasers of imported boats should file Form 1331 regardless of the amount of sales tax due. For any other items or accessories listed on the invoice with the boat that are not included in the sales price of the boat, dealers must continue to collect and remit sales tax. 

Taxes should be paid to the local tax collector first, and then to the state. For boats purchased within the state, the sale should be sourced to the parish in which the sale was made. For boats imported into the state, the sale should be sourced to the parish in which the purchaser resides. 

Finally, the $20,000 cap will be indexed for inflation every five years, beginning on July 1, 2030. The Department will publish the adjusted caps in Revenue Information Bulletins. For further updates regarding this R.I.B., contact Liskow attorneys Caroline Lafourcade, and Kevin Naccari, Jr. and visit our Tax practice page.