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Florida Finally Adopts Online Sales Tax Law by Karen A. Lake, CPA

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Posted on April 23, 2021 by Karen Lake

Under a newly enacted Florida law, out-of-state retailers will need to begin collecting and remitting sales tax on purchases made online by residents within the state beginning July 2021. Previously, online retailers were not required to remit sales tax to the state, thereby providing them with an unfair competitive advantage over Florida’s brick-and-mortar businesses that have long collected sales tax on all consumer purchases, both within and outside the state.

The passage of the E-Fairness Act brings Florida in line with 43 other states that have enacted economic nexus laws on remote sellers in the wake of the 2018 U.S. Supreme Court landmark decision in South Dakota v. Wayfair. In that case, the court rejected the prevailing law barring states from forcing remote sellers to collect and remit sales and use tax unless the seller had a physical presence in that jurisdiction. Instead, the court expanded states’ taxing authority, allowing them to impose sales-tax collection obligations on remote sellers based on sales volume rather than physical presence. In Florida, the economic nexus sales threshold that that allows the state to impose sales-tax collection obligations on foreign and domestic sellers has been set at $100,000 per year, beginning with the 2020 calendar year.

It is estimated that Florida’s e-fairness law will generate approximately $1 billion in annual tax revenue that the state can use to reduce taxes on commercial rent and replenish its unemployment trust fund depleted from the ongoing COVID-19 pandemic. Without the new law, Florida employers faced the prospect of tax hikes, including an increase in the state’s commercial lease sales tax, the only one of its kind in the nation. 

About the Author: Karen A. Lake, CPA, is a state and local tax (SALT) specialist and an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where she helps individuals and businesses navigate complex federal, state and local tax laws, and credits and incentives. She can be reached at the firm’s Miami office at (305) 379-7000 or info@bpbcpa.com.