Florida is one of seven states that do not require remote retailers to collect and remit sales taxes from online purchases, placing the burden on residents who are supposed to pay the state’s 6 percent sales tax when they make an online purchase.
Of course, few do. In fact, few even know how to go about paying the sales tax on online purchases because Florida doesn’t provide a clear way to do so.
Sen. Joe Gruters, R-Sarasota, has once again submitted an “e-fairness” bill for the upcoming 2020 legislative session that he says could generate as much as $750 million a year in revenue for state and local governments.
Gruters has pre-filed Senate Bill 126, which revises and renames several definitions, such as replacing the term “mail order sale” with “remote sale,” but more importantly seeks to balance the playing field for brick-and-mortar businesses who pay sales taxes and online retailers that don’t.
“It’s not an end-all-and-make-everything-Eden bill,” he told Florida Politics, “but it’s a way to do best by our retailers.”
Last year, Gruters filed a similar bill, SB 1112, that would require online retailers that sell at least 200 items or $100,000 worth of items to collect state sales taxes.
“This bill is about fairness. This bill is about collecting something that is already owed,” Gruters said during the committee hearings on SB 1112 in April, dismissing claims that it was a tax increase. “We’re making our average, everyday citizens guilty of not paying their taxes.”
Collecting online sales taxes is not increasing taxes, he said.
“Some people say this is a tax increase. It’s not. It’s a tax that’s currently owed,” he said in April.
Under SB 1112, Gruters said, collecting online sales tax would generate about $304.5 million next fiscal year, $554.4 million in 2021 and $710 million a year afterward.
SB 1112 passed the Senate’s Commerce & Tourism and Finance & Tax committees but died in the chamber’s appropriations committee.
Florida is one of a few states that have not changed their online sales tax collection laws in the wake of the landmark June 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, which allows states to compel out-of-state remote sellers to collect and remit sales taxes.
According to the bill's fiscal note, through May, at least 316 bills across all 50 states had been introduced addressing the Wayfair ruling. Florida was the only state to not impose any changes to its remote sales tax collection programs this year when SB 1112 died in committee.
States that did not have “clear authority” in state statutes to require remote sellers to collect tax needed to establish that before adopting rules and regulations in how they would proceed.
Of course, not all states adopted the same rules and regulations for remote sales tax collections and some laws could be subject to litigation if perceived to vary from the Supreme Court’s suggestion to include features in South Dakota’s upheld law.
South Dakota’s law excludes small vendors with limited business in the state from having to collect taxes; prohibits “retroactive” sales tax collection; and adheres to uniform rules contained in the Streamlined Sales & Use Tax Agreement [SSUTA] to make it easier for sellers to comply.
The SSUTA simplifies the registration process for businesses that operate in multiple states and includes common sales tax-related definitions and rules, uniform rate structures, as a way to reduce burdens on smaller remote sellers. The SSUTA also exempts smaller remote sellers from tax collection responsibilities and provides remote sellers free tax software.
There are 23 full-member SSUTA states. Tennessee will become the 24th member on July 1. The top six sales tax collection states by population – including Florida – are not members.
Among variations in remote sales collection is at least 13 states in 2019 that placed responsibility for collecting and remitting sales taxes on “marketplace facilitators” on behalf of third-party sellers.