On March 25 Florida's State Senate approved legislation in a 30-10 vote to require online retailers who do not have a physical presence in Florida to collect sales taxes and remit them to the state of Florida. Revenue derived from collecting the sales taxes would be used to boost the State's unemployment compensation system.
“Rather than treating additional revenue that is already owed to the state as a windfall, the prudent thing to do is to reinvest these funds in our Unemployment Compensation Trust Fund, helping businesses survive a situation no one could have anticipated, and shoring up benefits for the struggling Floridians who have lost their jobs as a result of this pandemic,” said Senate President Wilton Simpson (R-Trilby).
Filed in the state's Senate by Senator Joe Gruters (R-Sarasota) SB 50 and in the state's House of Representatives by Rep. Chuck Clemons (R-Newberry) HB15 the proposed measures would require that all companies doing business in Florida whether at brick-and-mortar locations or online, collect and remit to the state existing sales taxes required on purchases made by Floridians. Specifically, those companies with no physical presence in Florida would be required to collect Florida sales tax on any taxable items delivered to purchasers in Florida if the out-of-state retailer makes a substantial number of sales in the state.
Currently, retailers that do have a physical presence in Florida are required to collect and remit tax on items sold in the state. Retailers who do not have a physical presence here are not required to do the same.
If the bills are passed, the collections could represent an additional $973.6 million during fiscal 2021-2022 and $1.08 billion every year thereafter, according to the staff representatives of the Senate, House, Governor’s Office, and the Legislature’s Office of Economic and Demographic Research who participated in a recent Revenue Estimating Conference.
“Right now, Florida-based, brick and mortar businesses are at a disadvantage because they collect sales tax and their out-of-state competition does not,” Gruters said. “Sales tax is money already owed to the state, and collecting it is the right thing to do.”
Clemons said that the proposed measures would level the playing field for in- and out-of-state retailers.
“We cannot continue to allow free rides for out-of-state businesses that haven’t paid the sales taxes they owe Florida;” Clemons said. “It’s not fair to the businesses with a physical presence in Florida.”
Senate President Wilton Simpson (R-Trilby) and House Speaker Chris Sprowls (R-Palm Harbor) said that the bills' passage would save Florida businesses from an unexpected tax hike, and ensure that necessary compensation is available for Florida workers seeking re-employment.
“Everytime government turns a blind eye on collecting taxes, we put a greater burden on the businesses and Floridians who are following the law,” Simpson said. “Making sure we are collecting existing taxes that are owed is the right thing to do.”
Meanwhile, Sprowls said that the ability to hire and retain employees is key to Florida's post-pandemic economy.
“They can’t do that if they’re facing substantial tax hikes that, in some cases, would amount to a 700 percent increase in four years over what they would pay in Florida unemployment (reemployment) taxes,” Sprowls said.
In total, the SB 50 represents $4.5 billion in the next five years, Simpson said.
“It’s, I believe, probably the single largest tax break for small businesses that we would probably ever pass,” he said.
HB15 is scheduled to go before the Commerce Committee and was approved by the Ways and Means Committee.