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Florida Considers Online Sales Tax

  • Feb 11, 2013 | Gail Cole

 The Florida Online Sales Tax Bill Is Pending Review.

UPDATE. 6.17.13: Florida SB 316 died in the Appropriations Committee on May 3, 2013.

Remote retailers are currently not required to collect and remit sales tax in Florida -- a fact that costs the Sunshine State an estimated $425 million annually. There is a growing trend among states to go after that revenue, particularly from large online retailers such as Amazon.com. If some Florida lawmakers have their way this session, Florida will join states like Arizona, where Amazon now collects sales tax, and Connecticut, where it will begin sales tax collection in November.

The argument for Internet sales tax collection is strong, particularly given the fact that sales tax is responsible for approximately 70% of Florida's general revenue. At the same time, "Governor Rick Scott (R) and some GOP lawmakers are leery of supporting anything resembling a tax hike."

One solution may be a compromise in the form of a revenue-neutral Internet sales tax. Indeed, when remote sales tax was put forth in last year's legislative session, Governor Scott "said he would not sign an Internet sales tax unless it was revenue-neutral." This year's bill meets that qualification: it includes tax breaks for machinery and equipment used in manufacturing, and "a $150 million cut in the communications services tax."

Is Revenue-Neutrality Enough?

Tax breaks may satisfy the governor's criterion of revenue-neutrality, but they may not be enough. A Senate staff analysis noted that "[m]any of the states that have enacted similar laws have become involved in lawsuits challenging the constitutionality of their laws."

In New York, online retailers whose affiliates generate at least $10,000 in sales must pay sales tax. Amazon and Overstock.com are complying with the law, but they're also battling it in court. In Georgia, Amazon is flouting a new law that requires it to collect sales tax. Richard Pomp, from the University of Connecticut School of Law, has said that "Amazon is likely not collecting tax in Georgia because it thinks it has room to challenge the law… ."

Amazon and Georgia are reportedly discussing the possibility of a new Amazon fulfillment center in Georgia. Such a facility would create nexus, which would unquestionably require Amazon to collect and remit Georgia sales tax. It would also enable the retailer to complete orders more quickly; Amazon does not have any fulfillment centers in Florida.

The Waiting Place

On February 5, the Commerce and Tourism Committee approved the bill (SB 316) in a 10 to 1 vote. It is currently under review. If enacted, it will take effect July 1, 2013.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.