ISSUE: Since Florida currently has no effective or efficient way to collect sales or use taxes that are due and owing on purchases made over the Internet or from other remote sellers, should the Florida Retail Federation seek legislation during the 2012 Legislative Session to enhance the collection efforts of these taxes by changing/expanding the definition and application of “nexus” for sales tax purposes related to companies that exploit the Florida retail market through remote means.
DISCUSSION: The state of Florida does not actively attempt to enforce the collection of sales/use taxes on purchases made over the Internet or from other remote out-of-state vendors. Florida law is very specific in stating that if the sales tax is not collected at the time of sale, the purchaser is required to remit a use tax directly to the state of Florida, but since there is no active enforcement of this requirement, it is necessary to establish ways to require the remote vendors to collect the sales tax at the time of sale that would not violate the Federal Constitution.
Several states have now begun to tackle this collection issue by creating a broad based grass roots effort, known as Main Street Fairness, to pressure the various state governments to enhance the nexus provisions related to physical presence and extended nexus to click through sellers located within the jurisdiction of a particular state. Recently, the state of California was successful in settling the dispute with Amazon.com by having Amazon agree to the conditions of the California law, which will allow Amazon.com to continue to not collect the sales tax for one year, but they must give notice to California citizens in the interim period that the tax is due and should be paid directly to the State. This occurrence has resulted in the desired effect of having the world’s largest Internet vendor being placed on the same level playing field as brick and mortar retailers, which eliminates a government created price differential. Hopefully Florida will be able to negotiate a similar resolution.
POSITION: The Florida Retail Federation will encourage the Florida Legislature to clarify its position on the collection of the sales/use taxes and pass additional legislation on nexus which resembles the California statute that will eliminate the current price disparity between Internet purchases and purchases made at brick and mortar retailers.
RELATED BILLS
SB 1514 (Detert)
UPDATES
On Tuesday, January 10th, the 2012 Legislative Session officially convened. The House Chamber was packed with officials as Governor Rick Scott gave his State of the State Address. We were pleased to hear the Governor make the following remarks, “create a level playing field for all competitors and then get out of the way so they can compete. What we can do is to continue to put Florida companies in a position to out-compete companies in all other states and countries.”
Those words would seem to indicate that the Governor has heard our message regarding the Main Street Fairness Act calling for the legislature to update Florida’s tax code so that internet retailers are subject to the same rules as brick and mortar retailers. We are working with the legislature on a number of bills that will resolve this issue: HB 861 by Rep. Mike Horner; HB 1085 by Rep. Greg Steube; and SB 1514 by Sen. Nancy Detert. As these bills move along in the process, we will continue to bring you updates.
2/17/12
On Thursday, the Senate Banking and Insurance Committee passed the Main Street Fairness Act, SB 1514, by Sen. Nancy Detert. The comments from the committee members showed that they are solidly behind Sen. Detert in her effort to bring a level playing field to the retail industry by requiring online sellers to collect and remit the sales tax due on purchases made over the internet. It was also clear that the members expect to see any increase in tax revenue returned to the citizens of Florida. There was much debate about how best to do this, and Sen. Detert made a commitment to work with her colleagues on creating an equitable and feasible solution. In the House, a bill by Rep. Greg Steube, HB 1085, is the closest match to the Senate bill. Unfortunately, we have not been able to obtain a commitment from House Leadership that this bill, or a similar bill by Rep. Mike Horner, will receive a hearing in any committee. With only three weeks left of Session, it will be a monumental task to move it forward at this point; but we won’t give up.
Executive Vice President
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Randy is responsible for coordinating all aspects of FRF's government affairs efforts.
Legislative Update
Report on Pro-Growth Tax Reforms and Internet Based Sales
For many years sales subject to state sales taxes across the country, including Florida, have not been collected. Due to a 1992 Supreme Court decision, when sales occur over the Internet by a seller whose physical presence is outside of Florida, that retailer does not need to collect Florida’s state sales tax. The practical impact of this decision has been to leave billions of dollars of sales tax collections uncollected.
To read the complete report, click here: view report.
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© 2012 Florida Retail Federation