With Florida law, almost all states require the collection of sales tax online
Florida, one of the last two reluctant states to pass economic link legislation following Supreme Court ruling Wayfair decision to tax online sales, ultimately passed a bill that applies sales tax collection requirements to distance sellers and market facilitators.
Under the bill, distance sellers and market facilitators will be required to collect Florida sales taxes on sales to buyers in Florida if the seller or facilitator makes a substantial number of sales in the state. “Substantial” is defined as the completion of any number of taxable distance sales in Florida in excess of $ 100,000 in the preceding calendar year. The bill comes into force on July 1, 2021.
Governor Ron DeSantis, who was against similar legislation when he was a member of Congress, signed the bill on April 19. Missouri is now the only state that imposes a sales tax that has not enacted such legislation.
“The problem was always that they didn’t want new taxes anymore,” said Scott Peterson, vice president of US tax policy and government relations at Avalara. “It’s a perfectly valid position to take. If you are a “tax-free” legislator the last thing you want is another tax. They had never needed this extra money before because they could always balance their budget. But things have changed.
The pandemic has created massive unemployment in many states, draining their unemployment insurance funds. “When the fund falls below a specified level, it triggers an automatic increase in state employers,” Peterson added.
Each state has its own unemployment fund, as well as access to a federal fund that lends money to states to pay for insurance, which states must then pay back. “Employers end up having to pay higher taxes to reimburse the federal government,” said Peterson.
“The pandemic, with its effects on collecting and spending in Florida, seems to have changed Governor DeSantis’ mind,” Peterson said. “We used to think, ‘This will make money and we don’t know what to do with that extra money.’ Well the pandemic has solved that. One of the aspects of the unemployment insurance fund is that there is always money coming in and money going out. “
The increases are automatic, Peterson noted. “When the fund falls below a specified level, it triggers an automatic increase for employers. The federal government has a loan program, to lend money to states to pay for insurance, but they have to pay it back – state employers end up paying higher taxes to pay back the federal government.
Florida’s fund is currently at zero, so the state will use the money from Internet sales tax collection to reimburse the federal government, which will stop the automatic UI tax increase for local employers.
Florida retailers have pushed the government to level the playing field, according to Peterson. “So far, Florida retailers have collected sales taxes from other states, and yet Florida hasn’t imposed the same burden on everyone, but retailers in those states haven’t collected the same. Florida tax. “
The new law revises the definition of “retail sale” to include facilitated sales in a market.
“All of the other states that collect vendors at a distance have included a requirement to collect market vendors,” Peterson noted. “There has been a long legal debate over the right of a state to require a market to collect sales tax when the market says, ‘We are not the seller, it is someone else.’ . But Florida ignored the distinction, and that’s typical of every other state that has done the same.
According to Jeff Carroll, general manager of alcoholic beverages at Avalara, the direct-to-consumer alcoholic beverage industry can be typical of many distance sellers and markets. It was one industry in particular that hoped Florida would remain a drag on building an economic link.
“This new legislation has DTC alcohol sellers, and especially wine producers, on their toes,” Carroll said. “Wineries, producers and markets wanted Florida to maintain the status quo, and the situation can be described as divided, at best. The economic link adds layers of complexity to one of the most regulated industries in the United States, and sellers are struggling to understand and comply with the new regulations. “
Florida’s beverage law can have a ripple effect, so to speak, on other states. “While complexities for sellers of alcoholic beverages exist across the country as a whole, economic link news is important in Florida as it is a great destination state for wine shipments,” he added. . “And wineries didn’t previously need to register in Florida, but now they’ll need to join the Economic Link’s compliance program.”