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Fla. Bill For Online Sales Tax Back On The Table For 2021

By Paul Williams · Dec 1, 2020, 5:12 PM EST

Florida lawmakers are primed to again consider legislation to impose a sales and use tax collection obligation on remote sellers and marketplace facilitators next year under a bill introduced in the state House of Representatives.

H.B. 15, introduced Monday, would require remote sellers and marketplace facilitators such as to collect and remit tax if they have 200 or more sales or more than $100,000 in sales into the state in the previous calendar year. If enacted, the bill would take effect July 1, although some of the bill's marketplace sections would apply as of Oct. 1.

Florida's legislative session begins March 2. Sunshine State lawmakers weighed similar proposals in the last few years before shelving them amid some concerns from Republicans who perceived the bills as imposing a tax increase.

The bill is co-sponsored by Reps. Chuck Clemons, R-Cross City, and Chip LaMarca, R-Lighthouse Point. A representative for Clemons did not immediately respond to a request for comment on Tuesday, and LaMarca was unavailable for comment.

Florida and Missouri are the only states with a sales tax that haven't begun requiring remote sellers to collect and remit taxes after the U.S. Supreme Court's 2018 Wayfair decision, which did away with the physical presence standard for sales and use taxes. Florida is also one of three states that lack a tax requirement for marketplaces.

While Wayfair-related proposals have been scuttled in the past, pressure on lawmakers to pass a bill that would tax on online sales may be higher when lawmakers convene as they work to address a revenue shortfall from the spread of COVID-19, the respiratory illness caused by the novel coronavirus.

Because Florida does not levy a personal income tax, the state relies heavily on sales taxes to balance its budget and has been hit hard by a downturn in tourism amid the pandemic.

Sales tax collections plunged $1.8 billion below projections from April to July before exceeding estimates that were adjusted to account for the pandemic in the following months, according to a Monday report from the Florida Office of Economic and Demographic Research. The report said that sales taxes accounted for nearly 92% of October's gain of $313.5 million above the month's adjusted revenue projections.

But the pandemic's overall impact on the state's fiscal health remains grim. From April through October, Florida's tax collections are more than $2.3 billion below January estimates, despite coming in at $35.4 million above those initial projections in October, according to the report.

Revenue estimates from prior online sales tax bills have said that a Wayfair-related tax could generate nearly $700 million in state and local tax revenue annually. A fiscal note on H.B. 15 was not immediately available.

Esteban Leonardo Santis, a policy analyst for the Florida Policy Institute who focuses on tax and revenue issues, told Law360 on Tuesday that the organization is advocating for the state to enact a tax on online sales as one of several measures to counter the pandemic's drain on Florida's coffers. In the past, the institute has also outlined its support for a shift to combined reporting and conforming to the federal code as other means to raise revenue.

"FPI's position is that modernizing enforcement of online sales taxes is one strategy to address pandemic-related revenue shortfalls, and it should be prioritized alongside initiatives to close corporate tax loopholes and other revenue-raising strategies," Santis said.

When asked whether Florida should consider a 200 transaction threshold — which some states have eschewed to avoid imposing tax obligations on businesses with large volumes of small sales — Santis noted that other Southeast states like Georgia and North Carolina have nexus thresholds of 200 transactions or $100,000 in sales.

"To start, Florida should look to Southeast trends; thus, the 200 transactions or $100,000 is a useful starting point," he said. 

Other states in Florida's region, such as South Carolina and neighboring Alabama, have dollar thresholds of $100,000 and $250,000, respectively, without a transaction threshold.

A task force composed of representatives from state business trade groups, including the Florida Retail Federation and Florida's chapter of the National Federation of Independent Business, has also already thrown its support behind an online sales tax bill for the 2021 session.

A Wayfair proposal was among the legislative recommendations that the task force released in a report on Monday highlighting tax measures that it believes can help the state's economy recover from the pandemic.

"This measure is not a 'tax increase,' but it would provide a means to offset other potentially beneficial tax reductions and to level the playing field for Florida businesses," the report said.

Representatives for the Republican and Democratic leadership in the House did not respond to requests for comment on Tuesday.

--Editing by Vincent Sherry. 

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