- Florida will now require out-of-state vendors to collect sales taxes as the state looks to generate revenue and level the playing field between online and physical retailers.
- Gov. Ron DeSantis signed a bill this week that adds a 6% tax to remote sales effective July 1, which sellers must collect and remit.
- In writing the bill, Florida's legislature stated that it "intends to equalize the tax collection responsibilities of retailers both inside and outside Florida."
Florida's tax was made possible by the 2018 Supreme Court decision that overturned decades of precedent that allowed online retailers to dodge sales tax.
For years, states and traditional retailers argued the disparity in tax collection effectively gave e-commerce an advantage over local brick-and-mortar stores and created revenue holes for governments. The U.S. Government Accountability Office estimated at one point that states were losing $8.5 billion to $13 billion every year in uncollected taxes.
The Supreme Court ultimately sided with states and retailers in its decision in South Dakota v. Wayfair, in which South Dakota argued that it should be able to collect taxes from sellers with an "economic" presence in the state rather than just a physical one.
The decision paved the way for local e-commerce sales taxes, and states soon started changing their law books accordingly. Of the 45 states that collect sales tax, Missouri is now the only one left without a "collect-and-remit" provision that allows for e-commerce sales taxes following Florida's law, according to Bloomberg Tax. And Missouri is not far behind.
That collect-and-remit provision is key to practical implementation of a sales tax. Floridians as consumers were previously required to voluntarily remit sales taxes themselves for purchases not collected by the seller. That hardly ever happened in practice. As a reporter for the South Florida Sun Sentinel put it, "Few consumers were aware of this requirement, few complied, and the state did little to enforce it."
Now sellers, including those on platforms such as Amazon's massive third-party marketplace, are required to do the collecting. That creates another point of tension around such laws. Some Amazon sellers have used civil rights laws to sue California for its pursuit of sales taxes from individual sellers rather than Amazon.
In arguing against e-commerce taxes, e-tailers made the case that it could have dire consequences for online businesses. But while remittance requirements might create burdens on individual sellers, the 2018 decision appears to have done little if anything to slow the expansion of e-commerce on the whole. Last year saw an incredible growth spurt in digital selling as consumers avoided stores amid the COVID-19 pandemic.