§301.4. Sales transaction sourcing rules

            A. Applicability. The provisions of this Section shall apply regardless of the characterization of a transaction as a sale of tangible personal property, a digital product, or a service. These provisions do not affect the obligation of a purchaser to remit use tax.

            B.(1) Definitions. For purposes of this Section, the following terms have the meanings ascribed to them unless the context indicates otherwise:

            (a) "Receive" or "receipt" means taking possession of tangible personal property, making first use of services, or taking possession or making first use of digital products by the purchaser or purchaser's designee.

            (b) "Use of digital products" means the location of the first act within this state by which the taxpayer, as a consumer, views, accesses, downloads, possesses, stores, opens, manipulates, or otherwise uses or enjoys a digital product.

            (c) "Use of a service" means the location of the first act within the state by which the taxpayer, as a consumer, uses, enjoys, or otherwise receives the benefit of the service.

            (2) General sourcing rules. Except as provided in Subsection C of this Section, for purposes of collecting or remitting sales or use taxes to the appropriate taxing jurisdictions, otherwise known as sourcing, on sales of tangible personal property, digital products, and services, the following rules shall apply:

            (a) If the sale of tangible personal property, digital products, or services is received by the purchaser, or the purchaser's designee, at a business location of the seller, the sale is sourced to that business location.

            (b) If the sale of tangible personal property, digital products, or services is not received by the purchaser at a business location of the seller, the sale is sourced to the location where receipt by the purchaser or the purchaser's designee occurs, including the location indicated by instructions for delivery to the purchaser or designee, if that location is known to the seller.

            (c) If Subparagraphs (a) and (b) of this Paragraph do not apply, the sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller's business, when use of this address does not constitute bad faith.

            (d) If Subparagraph (a), (b), or (c) of this Paragraph do not apply, the sale is sourced to the location indicated by an address for the purchaser obtained during the sale, including, if no other address is available, the address of a purchaser's payment instrument, when use of this address does not constitute bad faith.

            (e) If Subparagraph (a), (b), (c), or (d) of this Paragraph do not apply, or if the seller is without sufficient information to apply the rules set forth in Subparagraph (a), (b), (c) or (d) of this Paragraph, the sale is sourced to the location:

            (i) Indicated by the address from which the tangible personal property was shipped.

            (ii) From which the digital product was first available for transmission by the seller.

            (iii) From which the service was provided.

            (3) Sourcing for lease or rental of tangible personal property. The lease or rental of tangible personal property, excluding motor vehicles, is sourced as follows:

            (a) For a lease or rental that requires recurring periodic payments, payments are sourced to the primary location of the property leased or rented for each period covered by the payment. The primary location of the property is as indicated by an address for the property provided by the lessee that is available to the lessor from its records maintained in the ordinary course of business, when use of this address does not constitute bad faith. The primary location of the property is not altered by intermittent use at different locations, such as use of business property that accompanies employees on business trips and service calls.

            (b) For a lease or rental that does not require periodic payments, the payment is sourced the same as a retail sale in accordance with Paragraph (2) of this Subsection.

            (c) The provisions of this Paragraph do not affect the imposition or computation of sales or use tax on leases or rentals based on a lump-sum or accelerated basis, or on the acquisition of property for lease.

            C. Exceptions to the general sourcing rules. The following sales are sourced as follows:

            (1) Vehicles. Sales and leases of vehicles subject to the Vehicle Registration License Tax Law pursuant to the provisions of R.S. 47:451 et seq. shall be sourced as provided for in R.S. 47:303(B)(3)(b)(ii)(bb).

            (2) Telecommunications services. Sales of telecommunications services shall be sourced as provided in R.S. 47:301.1.

            (3) Repairs to tangible personal property. Repairs to tangible personal property shall be sourced where performed.

            D. Exceptions for purposes of sales and use tax levied by political subdivisions:

            (1) The lease or rental of tangible person property, excluding motor vehicles, shall be sourced, for purposes of tax imposed by political subdivisions, as follows:

            (a) 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) Tax for subsequent lease or rental periods is due to the local taxing jurisdiction where the property is primarily located provided there is no additional transfer of possession. The primary location of the property shall be the 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 leased property within a jurisdiction where the property is not primarily located shall subject the lessee to the taxes imposed by that political subdivision. However, a credit shall be allowed for any taxes previously paid to another political subdivision for that lease period pursuant to Subparagraph (B)(3)(a) of this Section. The lessee shall maintain records and report any additional taxes due if leased property is used outside of its primary location.

            (d) Leases or rentals that do not require periodic payments shall be sourced in the same manner as a retail sale of tangible personal property in accordance with Subsection A of this Section.

            (2)(a) Computer software, prewritten computer software access services, information services and digital products that are used in more than one political subdivision within this state shall be sourced according to the number of users or licensees within each political subdivision, if known to the seller at the time of the transaction. The seller shall allocate the sales price based on the number of users or licensees in each political subdivision during the taxable period. If the seller does not have sufficient information to allocate the transaction among political subdivisions, the seller shall source the transaction pursuant to Paragraph (B)(3) of this Section.

            (b) The provisions of this Paragraph shall not affect the obligation of a purchaser to remit use tax to the proper political subdivision based on the number of users or licensees within each political subdivision.

            E.(1) Records related to sourcing are considered records of the taxable sales, purchases, leases, and rentals, and shall be retained, preserved, and produced by the dealer in accordance with R.S. 47:309 and 337.29.

            (2) If the dealer fails to keep, preserve or produce sourcing records for its taxable sales, purchases, leases, or rentals, the secretary or local collector shall determine the source of the transaction. The secretary's or local collector's determination shall be considered prima facie correct.

            Acts 2024, 3rd Ex. Sess., No. 11, §2, eff. Dec. 4, 2024.