Louisiana Sales Tax Penalties & Interest Checklist
Louisiana sales tax penalties and interest are charges added to unpaid sales tax by the
Louisiana Department of Revenue (LDR). If a business collects sales tax from
customers but does not remit it to the state, or if a return is filed late or underreports tax, penalties and interest begin to accumulate. These charges increase the total amount owed and can make the original debt significantly larger over time.
Understanding how Louisiana calculates these additions and what triggers them is essential for managing tax obligations and avoiding further collection actions. This checklist explains what penalties and interest mean, why the state applies them, and the steps typically involved in addressing them.
What This Issue Means
Louisiana sales tax penalties and interest are separate charges added to the unpaid sales tax liability. Interest is calculated daily on the unpaid tax balance and continues to grow until the balance is paid in full. The interest rate changes annually and is set at three percentage points. plus three percentage points
For 2025, the annual rate is 11.25 percent, which equals 0.030822 percent per day. For
2026, the yearly rate is 10.5 percent. Penalties are additional charges imposed for specific violations, such as filing late, underreporting taxes, or failing to remit collected funds. For most taxes, the penalty is 5 percent of the unpaid tax for each 30-day period
(or fraction thereof) that the failure continues, up to a maximum of 25 percent.
This means penalties continue to increase every 30 days until they reach the maximum after five periods. For individual income tax only, the late payment penalty is 0.5 percent per 30-day period, also capped at 25 percent.
Together, these charges represent the state's way of enforcing compliance and recovering costs associated with collection efforts. Both charges appear on notices issued by the LDR and add significantly to the original debt.
Why the State Issued This or Requires This
Louisiana applies penalties and interest to enforce the timely filing and payment of sales tax. Interest compensates for the time value of money and the administrative burden of pursuing unpaid tax. Penalties serve as a deterrent to late or incomplete filings.
Common triggers include: filing a return after the due date, paying tax after the deadline, underreporting taxable sales, or failing to file a return entirely. The LDR uses these charges as part of standard collection procedures when accounts become delinquent.
What Happens If This Is Ignored
If penalties and interest are not addressed, the total debt grows each month. Interest continues to accrue daily without limit, while penalties increase by 5% every 30 days, up to a maximum of 25%. The state may issue additional notices, escalate the account to a collection unit, or pursue enforcement actions such as liens, levies, or business license suspension.
These actions typically occur in stages, but the state does not publish exact timeframes for escalation. The longer an account remains unpaid, the more difficult it becomes to resolve and the greater the financial consequence. Ignoring notices does not reduce the debt and typically makes the situation worse.
What This Does NOT Mean
Receiving a notice with Louisiana sales tax penalties and interest does not mean the state has filed a lawsuit or seized assets yet. It does not automatically mean the business license will be suspended or that a lien has been recorded. Penalties and interest are routine additions to delinquent tax accounts and, by themselves, do not constitute a final enforcement action. However, they signal that the state expects the account to be resolved and that further action may be taken if the balance remains unpaid.
Checklist: What to Do After Receiving This or Identifying
This Issue
Follow these steps to address Louisiana sales tax penalties and interest
Step 1: Locate and read the entire notice from the Louisiana Department of
Revenue.
Do not discard any papers, even if they appear routine. Set aside all notices related to this account.
Step 2: Verify the tax period covered by the penalty and interest notice.
Check the dates to confirm the notice applies to the correct reporting period. Write down the period and any account or notice number shown.
Step 3: Gather all sales tax returns filed for the period in question.
Locate copies of filed returns, proof of payment, and bank records showing when remittances were made.
Step 4: Calculate the original tax liability yourself.
Use the same method shown on the return to verify the reported tax amount.
Cross-check this against sales records or accounting software to identify any discrepancies.
Step 5: Review the penalty and interest calculation shown on the notice.
The notice typically shows the penalty percentage, the number of days or months interest was charged, and the total amount due. Louisiana publishes current and historical interest rates on Form R-1111, which is available on the LDR website.
Step 6: Determine whether the return or the payment was filed late.
Review the filing and payment dates. Identify which action triggered the penalties. Write down the specific reason for the charge.
Step 7: Review the notice for any mention of penalty abatement or relief
options.
Some notices include information about requesting a waiver or reduction of penalties.
Note any deadlines mentioned.
Step 8: Contact the Louisiana Department of Revenue to ask clarifying
questions.
Use the contact information on the notice. Prepare a list of specific questions about the calculation or the charges.
Step 9: Request a payment plan or installment agreement if the full amount
cannot be paid immediately.
Louisiana offers payment plans through the Louisiana Taxpayer Access Point (LaTAP)
online system. Businesses use Form R-19027; individuals use Form R-19026. Payment plans require a $105 setup fee and must be for a minimum of 6 months. A down payment of approximately 20% may be required.
Step 10: If penalty abatement appears possible, gather documentation to
support a request.
Louisiana law allows penalty waivers when the failure is due to reasonable cause rather than negligence. Supporting materials typically include proof of timely filing in prior periods, evidence of a good-faith effort, or an explanation of circumstances affecting the ability to comply. If penalties exceed $100, you must submit either an affidavit sworn before a notary with two witnesses or complete Form R-20128 (Request for Waiver of
Penalties for Delinquency). Before the state will consider a penalty waiver request, you must be current on all tax return filings and pay all non-waived penalties, fees, interest, and taxes due.
Step 11: Send all correspondence to the Louisiana Department of Revenue
by mail or the electronic filing method indicated on the notice.
Keep copies of everything sent—request written confirmation of receipt.
Step 12: Track all dates
When the notice was received, when correspondence was sent, and when responses arrive, maintain a simple log to document your actions and the state's responses.
- Ignoring notices or assuming they will go away: Notices represent active
- Missing deadlines stated on notices: If a deadline for response or payment is
- Sending incomplete information or payments without clear identification: Always
- Failing to keep copies of correspondence: Keep everything sent to the state. You
- Assuming all penalties are final and cannot be reduced, Louisiana provides
- Paying only part of the debt without specifying how the payment should be
- Not following up if a response does not arrive within a reasonable timeframe:
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 13: Do not assume the debt will disappear if ignored.
Continue monitoring the account and responding to any additional notices received.
What Happens After This Is Completed
After these steps are taken, the state typically processes the information provided and responds within a reasonable timeframe. If a payment is made, the LDR applies the payment to the account and issues a receipt or confirmation. If a payment plan is requested, the department reviews the request and issues an agreement if approved.
If penalty abatement is requested, the state reviews the documentation and decides whether to reduce or eliminate the penalties. The department considers both the facts submitted and the taxpayer's previous compliance record. Prior penalty waivers are a significant factor in assessing compliance history. Each waiver request is considered individually. The state does not publish specific response timeframes, so processing times vary. Additional notices or requests for information may arrive as the state processes the account.
Common Mistakes to Avoid
Avoid these errors when addressing Louisiana sales tax penalties and interest: collection efforts. Ignoring them escalates the situation. listed, note it. Missing deadlines may reduce future options for relief. include the account number, tax period, and name exactly as shown on the notice. Incomplete information may be returned or misapplied. may need to reference these documents later. penalty relief for failures due to reasonable cause rather than negligence, though documentation requirements apply. applied: Clarify which portion of the balance (penalty, interest, or original tax) the fee covers.
Contact the LDR to confirm receipt of correspondence if you do not hear back within 30 days.
Frequently Asked Questions
How are penalties calculated in Louisiana?
Louisiana applies penalties as a percentage of the unpaid tax. For most taxes, including sales tax, the penalty is 5 percent of the unpaid tax for every 30 days (or fraction thereof) that the failure continues, up to a maximum of 25 percent. For individual income tax only, the late payment penalty is 0.5 percent per 30-day period, also capped at 25 percent. Penalties for late filing and late payment are considered separately.
How is interest calculated?
Interest is calculated daily on the unpaid tax balance at an annual rate that changes each year. The rate equals three percentage points above the judicial interest rate. For
2025, the annual interest rate is 11.25 percent (0.030822 percent daily). For 2026, the annual interest rate is 10.5 percent. Interest continues to accrue daily until the balance is paid in full. Louisiana publishes current and historical interest rates on Form R-1111.
Can penalties be removed or reduced?
Louisiana allows penalty abatement when the failure to file or pay is not due to negligence but to other reasonable cause. To request a waiver, you must submit either
an affidavit (if penalties exceed $100) or Form R-20128. You must be current on all return filings and pay all non-waived penalties, fees, interest, and taxes before the state will consider the request. The department finds both the facts submitted and your compliance history.
What if I believe the calculation is wrong?
Review the notice carefully and compare the math to the state's published rates on
Form R-1111. If you believe an error was made, contact the LDR with specific details about the discrepancy. Provide copies of supporting documents, such as filed returns or bank statements, showing payment dates.
Will the state accept a payment plan for penalties and interest?
Yes. Louisiana offers installment agreements through the LaTAP online system.
Payment plans require a $105 setup fee, must be for a minimum of six months, and may require a down payment of approximately 20 percent of the total amount due.
Interest and penalties continue to accrue on unpaid balances during the payment plan period.
How long do penalties and interest continue to accumulate?
Penalties increase by 5% every 30 days, up to a maximum of 25% (after 5 30-day periods). Once the maximum is reached, penalties stop growing. Interest continues to accrue daily without limit until the balance is paid in full.
What if I disagree with the notice?
Louisiana provides a dispute-resolution process through its administrative appeal system. Contact the LDR to ask about formal appeal or protest procedures, and request written guidance on how to file a formal dispute.
Will this affect my business license?
Unpaid sales tax, including penalties and interest, can result in a business license suspension or revocation in Louisiana. However, suspension is not automatic and typically occurs after other collection efforts fail. Addressing the balance promptly reduces this risk.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
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