united-states tax-law louisiana
How to handle local sales tax for online sales regarding unincorporated city/town limits
<p>I have a client Located in Louisiana performing online sales inside Louisiana which is in a destination-based sales tax state.  I have run into an issue where they are using the town name from the delivery address to collect town sales taxes; however, some towns have unincorporated zones where the residents use the name of the closest town for address reasons, but they are technically outside of town limits meaning that the sales tax should not apply to them.</p>
<p>Below is a map of one such town where the red-dotted line is the town limits, but the yellow line represents the unincorporated zone where people use the town's name in thier address.</p>
<p>Due to how these lines fall, how do destination-based sales tax states expect sales tax to be collected when the City and Zip code of an address can not be used to determine if a particular address is inside of a local tax area?</p>
<p><a href="https://i.stack.imgur.com/t54zE.png" rel="nofollow noreferrer"><img src="https://i.stack.imgur.com/t54zE.png" alt="enter image description here" /></a></p>

<p>There are vendors providing software to facilitate this sort of task. <a href="https://www.avalara.com/" rel="nofollow noreferrer">Avalara</a> is perhaps the best known, but I don't have any experience with it and couldn't say whether it's actually any good or not.</p>
<p>But the bottom line is that in a destination-based sourcing regime, sales taxes must be computed based on the <em>address</em> of the destination, not city or ZIP code associated with that address. As Avalara has noted, <a href="https://www.avalara.com/blog/en/north-america/2022/02/small-business-with-tax-calculations-you-cant-just-zip-through.html" rel="nofollow noreferrer">this is a giant hassle</a>, but it's nonetheless the current state of the law.</p>
<p>Of course, this assumes <a href="https://www.salestaxinstitute.com/sales_tax_faqs/what_is_nexus" rel="nofollow noreferrer">the seller has sufficient nexus</a> with Louisiana to trigger a duty to collect sales taxes in the first place. From the question, it is not clear whether this is true.</p>
