Florida state tax law did not reach the internet, leaving online shoppers regularly breaking the law without knowing it.
“It makes them outlaws,” said Rep. Chuck Clemons, R-Newberry, who is sponsoring a Florida House bill in the next session that aims to modernize Florida’s sales tax law to make it more like the laws of almost every other state.
As it is, Florida law requires buyers to remit their own taxes on sales of items they have purchased and dispatched from outside the state or country.
That’s how it works. When people check out a St. Petersburg Target, they are automatically charged 6% state tax and 1% local sales tax. Target then ensures that the money is sent to the state. But when customers shop online from outside Florida, sales tax is charged to them. The Florida Department of Revenue website has a downloadable form to help customers file that few people know exists.
As a result, Florida residents become vulnerable to state revenue department audits, and the state is losing millions of dollars in potential revenue. Some estimates put the state’s figure at about $ 700 million a year in unpaid sales tax dollars.
The new law would shift the burden of online sales charges to businesses, not the buyer. That is how the collection of sales taxes already works for physical stores or retailers with any physical presence in the state.
“This is not a new tax,” said Clemons. “It is to modernize the collection method that has already expired.
“We are after other states. I cannot think of any other taxes due in Florida, where the buyer is responsible for remitting to the state. “
A similar bill, sponsored by state senator Joe Gruters, R-Sarasota, was introduced in the Senate. But last year, attempts to update the law failed.
Clemons is optimistic that this session will be different. The pandemic – mainly tourism – has put the state in a deficit of more than $ 3 billion. Clemons says Florida cannot afford to leave hundreds of millions of dollars on the table.
In addition, retailers want sales tax to be applied fairly to all salespeople.
“It’s basically about leveling the playing field with online competitors,” said Florida Retail Federation President Scott Shalley. “It’s good for retail and it’s good for Florida.”
The law would provide uniformity in collecting sales tax at the point of sale, Shalley said. The accounts dictate that online retailers that sell at least 200 items or have $ 100,000 in sales in Florida must collect sales taxes to remit to the state.
Florida is one of two states with sales tax laws that have not been updated to reflect the reality of online sales following the 2018 South Dakota U.S. Supreme Court v. Wayfair. The case gave states more scope in collecting sales tax from salespeople, even when those companies have no workers or a physical presence in that state.
Florida currently works on an honor system. Whenever someone buys something online that is not taxed, they must complete the form and send it to the Revenue Department with the money.
The new bill would require online markets, such as Amazon, to collect sales taxes from their third-party vendors and remit the money to the state. Amazon is already doing this in 42 states, the District of Columbia and Puerto Rico.
In a statement to the Tampa Bay Times, Amazon says it supports the two proposed bills in the Florida Legislature.
About half of Amazon’s overall sales come from third-party vendors, with Amazon acting as a facilitator. Many of these third-party purchases are made by customers who may not know that they must pay sales tax themselves. The same goes for purchases made on Ebay.com.
Just once, since 2016, the Florida Department of Revenue has collected more than 5,000 individual submitted sales tax forms, according to state records.
For the 2019-20 fiscal year, the state revenue department reported receiving 4,315 of the forms. As of November 2020, the state had 1,684 forms for the current fiscal year. This is among tens of thousands of out-of-state online sales, no doubt happening every day.
The Florida treasury department estimates the state lost $ 480 million in 2019. But the Tallahassee, Florida TaxWatch-based nonprofit estimates that number at nearly $ 700 million. Sales tax expert Chuck Maniace could see revenue growing even more. He pointed to South Carolina, which has a much smaller economy than Florida, and raised an additional $ 311.5 million in sales tax revenue from October 2019 to October 2020 after updating its laws.
“Right now, companies are already complying with these rules in other states,” said Maniace. “Adding Florida is not going to materially change your burden.”
Maniace, who works for the tax software company Savos, said it would be easy for Florida to look to other states that have successfully implemented these laws as examples.
“Instead of working with thousands and thousands of individual remote vendors, the state can instead work with a smaller cadre of facilitators who, at least in theory, are better equipped to effectively handle sales tax in total for all of your customer sellers, ”Maniace said.
Peter Martin, 57 of Valrico, has been using Amazon to sell his line of herbal supplements since 2015. He saw how Amazon handles collecting sales taxes in other states when he ships goods to Texas or Illinois. He doesn’t have to worry about the state’s tax collection, nor its buyers. It depends on Amazon.
“This is how it should be done,” said Martin. “It is much more organized and the state is guaranteed to receive the taxes due”.
Clemons says the biggest barrier is education.
“I can’t say why it wasn’t approved before,” he said, “My speculation is that from an education point of view, without knowing all the facts, the predominantly conservative legislatures see it as a new tax.”
Clemons said the language of the House and Senate bills is not exactly the same, but he hopes to amend the bill on commission. The regular session of the Florida Legislature begins on March 2.