Where do Florida and Missouri currently stand with remote sales tax?

The race is on. Of the 45 states that have a general sales tax, 43 (plus Washington, D.C.) have adopted an economic nexus law or rule requiring certain out-of-state sellers to collect and remit sales tax. Florida and Missouri are the last two holdouts. Which will be the next state to tax remote sales? Which will win the distinction of being the last?

If a bill recently filed with the Florida Legislature gets any traction, Florida may become the 44th state to adopt economic nexus.

SB 126 was filed by Senator Joe Gruters, who introduced a similar bill last year (SB 1112). He emphasizes that this wouldn’t be a new tax: “The tax is owed. This makes it convenient for consumers.” If retailers don’t collect sales tax on taxable transactions at checkout, consumers are required to remit the corresponding consumer use tax to the state. Sen. Gruters also wants to remove the tax-free sales advantage for out-of-state sellers, to level the playing field for retailers in the state.

SB 126 would establish economic nexus and make marketplace providers (aka, marketplace facilitators) responsible for collecting and remitting tax on third-party sales. That’s what SB 1112 sought to do in the last legislative session. The most notable difference between SB 1112 and SB 126 is that the former was revenue neutral, while SB 126 is not: It could generate as much as $750 million annually for the state.

Economic nexus

Remote sellers that make “a substantial number of remote sales” into Florida would be required to register with the Florida Department of Revenue and collect and remit Florida sales tax. The bill defines “a substantial number” as:

• 200 or more retail sales of tangible personal property to be delivered into Florida in the previous calendar year; or
• Any number of retail sales of tangible personal property to be delivered into Florida in an amount exceeding $100,000 in the previous calendar year.

Economic nexus would take effect in Florida on July 1, 2020.

Marketplace providers

In addition to establishing economic nexus, SB 126 would require certain marketplace providers to collect and remit sales tax on all sales made through the platform, effective October 1, 2020.

Barring certain exceptions described below, the sales and use tax collection obligation applies to every marketplace provider with a physical presence in Florida, and to remote marketplaces with economic nexus.

Marketplace sellers with a physical presence in Florida would be required to register with the Department of Revenue and collect and remit tax on all taxable sales made outside of a collecting marketplace. The same is true for remote marketplace sellers that have economic nexus with Florida. When determining nexus, a remote seller should exclude sales made through a collecting marketplace. This suggests that remote marketplace sellers selling only through collecting marketplaces could not establish economic nexus.

The collection requirement wouldn’t apply to “travel agency services,” defined as “a person who solely provides travel agency services” such as arranging, booking, or otherwise facilitating vacation or travel packages, lodging accommodations, rental cars, and the like.

Similarly, delivery network companies may not be subject to the collection requirement. These are people who maintain “a website or mobile application used to facilitate delivery services, the sale of local products, or both.” Think of the food or grocery delivery services that have popped up in recent years. The term “delivery network company” doesn’t include “any delivery requiring more than 75 miles of travel from the local merchant to the customer.”

SB 126 states that a delivery network company is not considered a marketplace provider unless it’s a registered dealer in the state and “notifies all local merchants that sell through the delivery network company’s website or mobile application that the delivery network company is subject to the requirements of a marketplace provider under this section.”

The Missouri sales and use tax system is incredibly complex: There are 2,200+/- local tax jurisdictions in the Show Me State, and each one can have multiple local rates; local sales tax rates and local use tax rates don’t always match; there are special rates for food (sales tax and use tax), domestic utilities, and more. No wonder the Missouri Legislature stepped in, requiring the Missouri Department of Revenue to make it easier to find local sales and use tax rates.

Before the state can require remote sellers to collect and remit sales and use tax, Missouri will likely need to address this complexity. Alabama and Texas serve as examples: Alabama allows remote sellers to collect a simplified sellers use tax (SSUT); out-of-state retailers required to collect in the Lone Star State can choose to collect a single local use tax rate for all transactions. A similar Simplified Remote Sales Tax Remittance Program has already been proposed in Missouri.

No matter what happens in Florida or Missouri, it’s getting harder to sell across state lines without running into a remote sales tax collection requirement. To help businesses stay informed, we’re tracking the growing list of sales tax collection laws in this seller’s guide to nexus laws and sales tax collection requirements.