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Florida Remote Seller Bill

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Rödl & Partner Tax Matters Volume 2021-5, published April 26, 2021


This week, Florida’s governor signed Senate Bill 50 into law.  This law requires remote sellers and marketplace providers with no physical presence in Florida to begin collecting sales tax if their taxable sales to Florida customers in the prior calendar year exceeded $100,000.  The requirement is effective July 1, 2021. 

Florida now joins all states other than Missouri that are requiring taxation of remote sellers following the 2018 Wayfair decision.  In passing this law, Florida stated the intent was to recover funds lost from the impact of Covid, distribute money to the state’s unemployment compensation trust fund and finance the reduction of the sales tax on commercial rentals from 5.5% to 2%.

Definitions

Remote sales are defined as retail sales of tangible personal property ordered by mail, telephone, online or other means of communication with a person outside of Florida who will deliver the goods into Florida. Deliveries into Florida are presumed to be used, consumed, distributed, or stored to be used or consumed in this state.
Generally, any remote seller that exceeds $100,000 taxable sales in the prior year is considered to be a dealer for this purpose. Marketplace providers are also considered to be dealers.  “Marketplace facilitator” is defined as an individual or entity who lists or advertises for sale tangible personal property of a seller and who, directly or indirectly through agreements or arrangements with third parties, collect payment from the customer and transmits all or part of the payment to the marketplace seller.  A “marketplace” is defined as any physical place or electronic medium through which tangible personal property is offered for sale.  Certain exceptions apply.
 
Registration
 
Remote sellers and marketplace providers are responsible to register with the Florida Department of Revenue and collect and remit sales tax starting July 1, 2021. A safe harbor rule is in place that allows a registration by October 1, 2021, which relieves the above of their liability for tax, penalty, and interest due on remote sales that occurred before July 1, 2021.  If, however a person is already under audit, has been issued a bill, notice, or demand for payment, or is under an administrative or judicial proceeding as of July 1, 2021, the safe harbor rule does not apply.
 
Calculation of tax

The general sales tax rate is 6%. Furthermore, if tangible personal property is delivered to a county, that imposes a surtax, remote sellers need to collect and remit the surtax as well.
The new bill repeals the existing bracket collection schedules (“tiered rates”) in Fla. Stat. §212.12(9) and Fla. Stat. §212.12(10). Instead, tax must be calculated as percentage on the privilege of the use, consumption, storage for consumption, or sale of tangible personal property, admissions, license fees, rentals, and upon the sale or use of services.   A dealer has the possibility to apply the rounding algorithm to the aggregate tax amount computed on all taxable items on an invoice or to the taxable amount on each individual item on the invoice. For a transition phase between July 1, 2021 and September 30, 2021 both old and new calculation can be used. Beginning October 1, 2021, only the algorithm method must be used.
 
Further guidance

In the following weeks, further guidance is expected to clarify the changes made by this law.
The Department of Revenue may establish procedures of collecting use tax from unregistered persons who are only required to remit sales and use tax because they are remote sellers. Additionally, there might be a waiver for registration, a provision for irregular remittance of tax, elimination of the collection allowance and nonapplication of local option surtaxes.  We are monitoring guidance for further updates.
 
If you have any questions, please contact your Rödl & Partner representative.

This publication contains general information and is not intended to be comprehensive or to provide legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Consult your advisor.

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Any tax and/or accounting advice contained herein is based on our understanding of the facts, assumptions we have been asked to make, and on the tax laws and/or accounting principles in effect as of the date of this advice. No assurance is given that the conclusions would be the same if the facts or assumptions change, or are not as we understand them, or that the tax laws and/or accounting principles will not change subsequent to the issuance of these conclusions. In addition, we do not undertake any continuing obligation to advise on future changes in the tax laws and/or accounting principles, or of the impact on the conclusions herein.

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