Florida enacts remote seller sales tax economic nexus and marketplace facilitator filing requirements
On April 19, 2021, Florida Gov. Ron DeSantis signed into law Senate Bill 50, which expands the state’s sales/use tax reporting requirements by requiring remote sellers and marketplace facilitators to begin collecting and remitting Florida sales tax on July 1, 2021. The law requires remote sellers and marketplace facilitators who have gross sales into the state in excess of $100,000 during the prior calendar year to register with the Florida Department of Revenue, to begin collecting and remitting sales tax on taxable sales delivered into the state.
Prior to the enactment of the Senate Bill, Florida was one of only two remaining states (along with Missouri) that continued to maintain a physical presence standard for sellers of taxable goods and services into the state to require the collection and reporting of sales tax due from customers in the state.
What does this mean?
Beginning on July 1, 2021, an out-of-state retailer with no physical presence in Florida or a marketplace provider will be required to register and begin collecting Florida sales tax if they meet or exceed $100,000 of gross sales delivered to customers in Florida.
As part of the enacted Senate Bill, Florida also updated their definition of a “Dealer” to include retailers who transact “a substantial number of remote sales” in Florida, or a marketplace provider with a physical presence in Florida or who makes or facilitates “a substantial number of remote sales” through their marketplace into Florida.
The legislation also defines “remote sale” as “a retail sale of tangible personal property ordered by mail, telephone, the Internet, or other means of communication from a person who receives the order outside of [Florida] and transports the property or causes the property to be transported from any jurisdiction, including [Florida], to a location within [Florida].”
“A substantial number of remote sales” means “any number of taxable remote sales in the previous calendar year in which the sum of the sales prices … exceeded $100,000.”
To determine if your company is meeting the newly enacted economic nexus threshold, begin by reviewing calendar year 2020 gross sales into the state. If the sum of the gross sales during 2020 exceeded $100,000, then your company is required to register and begin collecting Florida sales tax on taxable sales made into Florida on or after July 1, 2021.
Note that the $100,000 per year minimum sales threshold filing requirement applies to total gross vs. net taxable sales. Florida assesses a minimum $50 penalty for failure to timely file a sales tax return for each required filing period, even when no tax is due with the filing.
There is a safe harbor period that relieves a person of the liability for tax, penalty, and interest due on remote sales that occurred before July 1, 2021, if they are registered with the Florida Department of Revenue before Oct. 1, 2021. A person who is 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, is not relieved of the liability.
It is critical that sellers understand the responsibilities and risks associated with sales tax collection by remote sellers and marketplace facilitators in order to avoid or limit future sales tax exposure.
Sellers should review their marketplace facilitators’ documents to verify that the marketplace provider has certified to the marketplace seller that they will collect and remit sales tax.
Sellers should review Florida sales (both retail and wholesale) that are not made through a marketplace facilitator to determine if they should register and collect Florida sales tax.
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.