If your small business has employees working in Louisiana, you’ll need to withhold and pay Louisiana income tax on their salaries. This is in addition to having to withhold federal income tax for those same employees. Here are the basic rules on Louisiana state income tax withholding for employees.
With rare exceptions, if your small business has employees working in the United States, you’ll need a federal employer identification number (EIN). You should obtain your EIN as soon as possible and, in any case, before hiring your first employee. EINs are issued by the IRS and you’ll need one first and foremost for federal taxes. In addition, some states use the federal EIN for state withholding tax purposes. Other states (like Louisiana) issue separate state tax ID numbers. You’ll need an EIN to register with the state (see below). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.
Apart from your EIN, you also need to establish a Louisiana withholding tax account with the Louisiana Department of Revenue (LDR). You set up your account by registering your business with the LDR either online or on paper. To register online, go to the Business Registration page on the LDR website. You should receive a confirmation email regarding your Louisiana Revenue Account Number within three business days. To register on paper, use Form R-16019 (CR-1), Application for Louisiana Revenue Account Number. If you register on paper, you should receive an account number in 2-3 weeks. There is no fee to register your business with the LDR.
All new employees for your business must complete a federal Form W-4 and the related Louisiana Form R-1300 (L-4), Employee's Withholding Exemption Certificate. If an employee does not provide a Form L-4, all of the wages paid to the employee are subject to withholding. You can download blank Form L-4s from the withholding tax forms section of the LDR website. You should keep the completed forms on file at your business and update them as necessary.
In Louisiana, there are three primary payment schedules for withholding taxes: semiweekly, monthly, or quarterly. There is also an annual payment schedule that only applies in unusual cases and is not covered here. Your payment schedule ultimately will depend on the average amount you withhhold from employee wages over time. The more you withhold, the more frequently you’ll need to make withholding tax payments. New employers generally are assigned to a quarterly schedule.
The exact threshold dollar amounts for the different payment schedules, as well as other rules, may change over time, so you should check with the LDR at least once a year for the latest information.
Due dates for payments are:
If the payment is due on a weekend or holiday, the due date is extended to the next business day.
Employers on a semiweekly payment schedule must make payments electronically. Other employers may pay electronically or on paper. You can pay electronically through the Louisiana Taxpayer Access Point (LaTAP). Employers on a monthly payment schedule who pay on paper must submit their payments with a Form L-1V,Withholding Payment Voucher, for the first two monthly payments each quarter. For the third (final) monthly payment of the quarter, they should send the payment with Form L-1, Employer’s Return of Louisiana Withholding Tax. Employers on a quarterly schedule who pay on paper must submit their payments with a Form L-1.
Employers on a monthly or quarterly payment schedule, and who pay on paper, should receive appropriate forms in the mail from the LDR. Form L-1Vs should be mailed to monthly payers around the 25th of each month. Form L-1Vs can also be created and downloaded from the Online Payment Vouchers page of the LDR website. A set of four Form L-1s (one for each quarter of the year) will be mailed out by March 20th each year. You should use the forms mailed to you to file your payments and returns. See below for more information about quarterly returns.
Returns must be filed for each reporting period (semiweekly, monthly, or quarterly) even if no tax was withheld for the period.
The LDR provides several different methods for calculating how much tax to withhold. For more information, check Form R-1306, Louisiana Withholding Tables and Instructions For Employers. The form is updated every year. You can download a copy from the withholding tax forms section of the LDR website.
Apart from making scheduled tax payments, businesses also must file quarterly withholding tax returns. The returns reconcile the tax paid for the quarter with the tax withheld for the quarter. Quarterly returns can be filed online or on paper. To file online, use the LaTAP website. To file on paper, use Form L-1, Employer’s Return of Louisiana Withholding Tax. As mentioned above, the LDR will mail you a set of these forms each year if you’re not filing online.
Employers on a quarterly payment schedule use Form L-1 both for their quarterly returns and also to submit their quarterly payments. Employers on a monthly schedule use Form L-1 both for their quarterly returns and for the third (final) monthly payment they make each quarter. Employers on a semiweekly schedule use Form L-1 both for their quarterly returns and for the sixth (final) monthly payment they make each quarter.
For quarterly and monthly payers, quarterly returns are due on or before the last day of the month following the close of the quarter:
For semiweekly payers, quarterly returns are due on or before the 15th day of the month following the close of the quarter:
As with tax payments, any return due on a weekend or holiday has its due date is extended to the next business day. You must file quarterly returns even if no tax was withheld during the quarter.
After the end of the year, you must file an annual reconciliation with the LDR that summarizes the employee taxes you’ve withheld during the year. The annual reconciliation is in addition to providing each of your employees with a federal Form W-2 summarizing the employee’s withholding for the year. Use Form L-3, Employer’s Annual Reconciliation of Louisiana Income Tax Withheld. You must include copies of the W-2s sent to all of your employees working in Louisiana with the Form L-3.
Larger employers are required to submit Form L-3 with copies of W-2s electronically. Other employers may submit the annual reconciliation electronically or on paper. Options for electronic submission include (a) the LaWage system; or (b) on CDs or DVDs using a record layout that is consistent with the Internal Revenue Service requirements.
The LDR will mail you a Form L-3 during either November or December. You can also download blank forms from the withholding tax forms section of the LDR website. Form L-3 is due on or before the first business day following February 27.
This article is only concerned with employees, not independent contractors. In general, different tax rules apply to independent contractors.
You may decide that it’s easiest to hand over responsibility for payroll, including withholding taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.
This article touches on only the most basic elements of Louisiana employee withholding taxes. Under Louisiana law, employers are liable for any underpayment of withholding taxes. Avoid possible penalties for making mistakes by checking both the IRS and DOR websites for the latest information. You also can get more information about small business tax issues in other articles here on Nolo.com.