Florida could enforce economic nexus as soon as July
The Florida Legislature is fast-tracking two bills that would require certain out-of-state sellers and marketplaces to collect and remit Florida sales tax in 2021: House Bill 15 and Senate Bill 50. This isn’t the first time lawmakers in Florida have tried to tax remote sales, but this time, they’re likely to succeed.
Both bills would establish economic nexus, which bases a sales tax collection obligation on a remote seller’s economic activity in the state. As in most other states with economic nexus, businesses with no physical presence in the state would have to register then collect and remit state sales tax if their sales into the state surpass the economic nexus threshold. These vary by state; you can find them all in this state-by-state guide to economic nexus laws.
Both bills would also require marketplace facilitators with economic nexus or a physical presence in the state to collect and remit sales tax on behalf of third-party sellers.
The first iterations of the bills contained significant differences. For example, the economic nexus threshold in HB 15 was based on sales volume (more than $100,000) or number of transactions (200 or more), while the threshold in SB 50 was based on sales volume alone (more than $100,000). The first versions of the bills also had different effective dates.
Both bills have been through the wringer since then — or at least through several committees — and are now more closely aligned. The transaction threshold in HB 15 has been eliminated. In both measures, economic nexus is created when a business has a “substantial number of remote sales” in Florida, defined as “any number of taxable remote sales in the previous calendar year in which the sum of the sales prices, as defined in s. 212.02 (16), exceeded $100,000.”
Importantly, the two measures now have the same effective date for economic nexus and marketplace facilitator requirements: July 1, 2021.
Yet the similarities don’t stop there. Both bills require marketplace providers with economic nexus or a physical presence in the state to collect and remit applicable local surtaxes in addition to the state sales tax. They also provide that the Florida Department of Revenue may allow for the nonapplication of local option surtaxes for “unregistered persons who, but for their remote purchases, would not be required to remit sales or use tax directly to the department.”
In-state marketplace sellers must register then collect and remit the tax due on all taxable sales made outside of a registered marketplace. When determining whether the economic nexus threshold has been met, a marketplace seller should only include sales made outside of the marketplace.
Both bills provide a safe harbor for businesses that failed to collect tax prior to July 1, 2021, provided they register with the Department of Revenue by October 1, 2021. This is intended to provide relief for marketplace sellers that had inventory in the state (e.g., in a marketplace facilitator’s warehouse) before July 1, 2021. For a marketplace provider with a physical presence in the state, it provides relief only for sales facilitated on behalf of a marketplace seller.
Both bills also require marketplace providers to collect and remit three fees related to the sales tax (the new tire fee, lead-acid battery fee, and E911 prepaid wireless fee), beginning April 1, 2022.
If either bill is enacted in the coming weeks or months, we’ll report about it here, in the Avalara blog. In the meantime, retailers and marketplaces whose retail sales of tangible personal property into Florida exceeded the $100,000 threshold in 2020 should consider developing a process to calculate and remit Florida sales tax. Avalara can help.
The 2021 sales tax changes report: midyear update
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