The Senate Commerce & Tourism Committee Tuesday unanimously approved a proposed “e-fairness” bill that would require online sellers to collect sales tax from Floridians and remit it to the state.
Senate Bill 126, pre-filed on Aug. 14 by Sen. Joe Gruters, R-Sarasota, and six fellow Republican senators, secured its 5-0 panel endorsement with little discussion.
The bill has scheduled hearings before the Senate Finance and Tax and Appropriations committees and could be ready for floor presentation early next year after the Legislature convenes on Jan. 14.
SB 126 seeks to revise and rename several definitions in the state’s tax statutes, such as replacing the term “mail order sale” with “remote sale,” and to legally mandate online retailers that sell at least 200 items or $100,000 worth of items to collect and remit the state’s 6 percent sales taxes.
Gruters says SB 126 would capture between $700 million and $750 million a year in uncollected sales tax revenues, which are the state’s single-largest source of income.
Gruters said requiring the collection of an owed tax is not raising taxes, nor creating a new tax, calling SB 126 an “e-fairness” bill that will balance the playing field for brick-and-mortar businesses who pay sales taxes and online retailers that don’t.
A similar measure, House Bill 159, was pre-filed on Sept. 25 by Rep. Chuck Clemons, R-Cross City. The bill has been referred to House Ways & Means, Commerce and Appropriations committees.
Both proposals are endorsed by state business interests, including the Florida Chamber of Commerce and the Florida Retail Federation (FRF).
After he filed HB 159, the Florida Chamber thanked Clemons for “standing up for Florida businesses, protecting job creators and consumers, and taking steps to build the perfect climate for business in Florida. Passage of HB 159 will help stop the current 6-percent disadvantage small businesses face compared to online businesses.”
The FRF, which has produced a video endorsing Gruters’ proposal and helped draft the measure, cheered Tuesday’s advance of SB 126.
“It’s time to level the playing field so that Florida companies aren’t competing with one hand tied behind their back,” the FRF tweeted Tuesday. “SB 126 by @JoeGruters & HB 159 by @ChuckClemons21 restore the free market by enforcing the laws!”
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.
It is also the only state that has not changed 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, at least 316 bills across all 50 states have been introduced addressing the Wayfair ruling since June 2018. Florida is the only state to not impose any changes to its remote sales tax collection programs.
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.
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.
There is criticism Gruters’ SB 126 is influenced by corporate interests. According to the Orlando Sentinel, lobbyists representing Amazon.com and Expedia – as well as the FRF – helped draft the bill and lobbyists from Uber Technologies Inc., Walmart, Target Corp., and Best Buy, reviewed it before it was filed.
The Wayfair ruling only affects large retailers, not small businesses, and the subsequent South Dakota law excludes small vendors with limited business in the state from having to collect taxes and adheres to uniform rules contained in the Streamlined Sales & Use Tax Agreement [SSUTA] to make it easier for sellers to comply.
The SSUTA also exempts smaller remote sellers from tax collection responsibilities and provides remote sellers free tax software.
Gruters’ SB 126 replicates South Dakota by requiring a retailer to collect and remit tax starting at either $100,000 in sales revenue or 200 annual in-state product sales, which could prove to be a burden for some small businesses because the bill does not propose adopting SSUTA guidelines.
There are 24 full-member SSUTA states. The top six sales tax collection states by population – including Florida – are not members.