ISSUE: Florida currently has no effective way to compel remote sellers to collect sales or use taxes that are due on purchases made over the Internet, which gives remote sellers an advantage over the retailers in Florida who are currently collecting sales taxes on Internet purchases and remitting them to the state. Should the Florida Retail Federation seek legislation during the 2013 Legislative Session to put retailers on a level playing field by changing/expanding the definition of “nexus” to require remote sellers who exploit the Florida retail market to collect and remit sales taxes.
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. Since there is no active enforcement of this requirement, it is necessary to establish a way to require remote vendors to collect the sales tax at the time of sale, and to do it in such a way that this requirement would not violate the United States Constitution. This can be done by clarifying the nexus provisions of the current state sales tax law, which will allow the Florida Department of Revenue to enforce the requirement to collect sales tax on Internet sales.
Several states have now begun to tackle this collection issue by creating a broad-based grassroots effort of brick-and-mortar merchants, known as Main Street Fairness, to pressure state governments for a resolution. One solution is to enhance the nexus provisions related to physical presence and extend nexus to click-through sellers located within the jurisdiction of a particular state – for example, in-state persons or businesses who receive a commission or other fee for referring sales through a website would be considered nexus for the remote seller. Recently, several states have enacted legislation that has caused Amazon.com to make concessions for the collection of the sales tax, but always at a delayed time frame in exchange for creating additional jobs within that state’s jurisdiction. During this period, Amazon continues to exploit the market in these states, but does not collect the sales tax, which maintains an unfair price advantage for Amazon until a date certain. While not totally satisfactory, this occurrence has resulted in the desired effect of having the world’s largest Internet retailer being placed on a level playing field with brick-and-mortar retailers, which eliminates a government created price differential. Hopefully Florida will be able to negotiate a reasonable resolution without continuation of the price differential for an extended period of time.
POSITION: The Florida Retail Federation will encourage the Florida Legislature to clarify its position on the collection of the sales/use tax to eliminate the current tax disparity among retailers, and to pass additional legislation on nexus to allow the Florida Department of Revenue enforce the requirement that remote sellers collect sales tax on Internet sales.
(4/11/2013) Florida Senate Appropriations Subcommittee on Finance and Tax passed SB 316, which will close the Internet sales tax loophole and create a level playing field for the retailers who collect Florida sales tax.
Executive Vice President
Randy is responsible for coordinating all aspects of FRF's government affairs efforts.
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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.
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