Florida requires the collection of sales tax on all in-person and online sales

On April 19, Governor DeSantis enacted a comprehensive tax program, Senate Bill 50, which provides temporary and long-term relief to Florida businesses. The new law requires the collection of sales taxes by online businesses and is expected to generate $ 1 billion in annual tax revenue for the state. This will level the playing field for Florida brick and mortar businesses that are required to collect sales tax.

Florida businesses face two challenges, which this legislation addresses:

(i) a significant increase in employer contributions for re-employment assistance given the withdrawal of funds from the Unemployment Compensation Fund due to the COVID-19 pandemic and

(ii) the sales tax obligation for commercial leases, which contributes to the inability of small businesses to operate profitably.

The new law directs the Revenue Department to calculate re-employment assistance tax rates regardless of the effects of the pandemic and directs online sales tax revenues to the Unemployment Compensation Trust Fund until ” the Fund to reach pre-pandemic levels (i.e. $ 4,071,519,600). Once the fund reaches its pre-pandemic amount, these funds will be used to offset revenue from the commercial rent tax, the rate of which will drop from 5.5% to 2% (plus the local surtax).

Online sales tax

Since June 21, 2018, when the Supreme Court of the United States South Dakota vs. Wayfair removed the “physical presence” requirement for states to tax out-of-state businesses that sell to buyers in a state, almost all states have imposed a sales tax on distance sales .

Florida currently taxes mail order sales, but requires the seller to have a physical presence in Florida. The new law extends the collection and remittance of sales tax to include all “market suppliers” or market sellers who have made a significant number of distance sales of personal property (i.e. those which in total exceed $ 100,000) delivered to the State of Florida in the preceding calendar year. It is these increased revenues that will be pledged to replenish the Unemployment Compensation Trust Fund and to compensate for lost revenues resulting from the reduction in the sales tax rate applicable to commercial leases.

Under the new law, distance sellers and market vendors are considered “resellers” for the purposes of Florida sales tax administration and will need to register with the Florida Department of Revenue, collect and remit taxes and file returns. No collection allowance is allowed for marketplace providers.

The new law comes into force on July 1, 2021. All taxes, penalties and interest due on distance selling that occurred before the effective date are canceled if the person responsible for distance selling registers before. October 1, 2021.

For these purposes, a “Marketplace Supplier” means a person who facilitates a retail sale by a Marketplace Seller by listing or advertising the Marketplace Seller for Sale of Tangible Movable Property in a Marketplace which collects directly. or indirectly the customer’s payment and forwards all or part of the payment to the market seller. If the Marketplace Seller does not use a Marketplace Provider but performs a significant number of distance selling directly to the Florida Marketplace, then the Marketplace Seller will become a Reseller and be liable for sales tax. A marketplace provider will not include travel agency services, delivery network companies, or payment processors.

“Distance selling” is defined as a retail sale of tangible personal property ordered by post, telephone, Internet or other means of communication from a person who receives the order outside that State and transports the property or has the property transported from any jurisdiction, including Florida, to a location in Florida.

The new law also requires the marketplace provider or marketplace seller, as the case may be, to pay not only state sales tax, but also any surcharge approved by the county in which a sale is made. is carried out, as well as, after April 1, 2022., 911 wireless emergency charges (in accordance with section 365.172, FS), used tire charges (in accordance with section 403.718, FS) and battery charges leaded (in accordance with section 403.7185, MSDS).

Re-employment assistance tax

Florida employers are required to pay a re-employment assistance tax, the proceeds of which are deposited into the Unemployment Compensation Trust Fund, which pays benefits to unemployed Floridians. An employer’s re-employment tax rate is calculated annually by the Ministry of Revenue using three factors: the Unemployment Compensation Trust Fund factor, the factor excluding charges and overpayments and a variable factor based on the unemployment experience of each employer. The re-employment assistance tax rate is structured to increase automatically as more benefits are paid and the trust fund balance decreases. As of January 2020, the Fund had a balance of over $ 4 billion. As of mid-March 2021, the balance was just over $ 400 million.

Commercial rent tax

Florida is the only state in the country to tax commercial rents at the state level. Since 1969, Florida has imposed a sales tax on the total rent charged under a commercial lease of real estate. Sales tax is due at the rate of 5.5% on the total rent paid for the right to use or occupy a commercial building. Surcharges on sales of local options may also apply. If the tenant makes payments such as a mortgage, ad valorem taxes, or insurance on behalf of the landlord, those payments are also classified as rent and are subject to tax. Commercial real estate includes land, buildings, office or retail space, convention or meeting rooms, airport tie-downs, and parking and mooring spaces. It may also involve the granting of a license to use real estate for the placement of vending machines, entertainment or newspaper machines. The new law reduces the state-level sales tax rate on commercial leases to 2%.

© 2021 Greenberg Traurig, LLP. All rights reserved. Revue nationale de droit, volume XI, number 110

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David A. Albanese