TALLAHASSEE, Fla. (WFLA) – As the end of the current legislative session draws closer this week, Florida Gov. Ron DeSantis signed five bills into law on April 19, including a law that adds a tax to online sales of products shipped into the state.
What does the new law do?
Starting July 1, SB 50, also known as the Park Randall ‘Randy’ Miller Act, revises what the state defines a retail sale as. Now, the state includes sales from online marketplaces in its definition of retail sales by amending the definition in Florida Statute.
The law makes it so businesses that made more than $100,000 in revenue through online sales of “real property” will be required to collect sales taxes on the products that are shipped to Florida customers.
The added tax to online shopping is expected to add about $1 billion in revenue each year to the state starting in Fiscal Year 2022. Portions of that revenue will be directed into the state’s Unemployment Compensation Fund in July, August and September each year, beginning in 2021.
Who & what qualifies under the new sales tax collection?
The state analysis said that the sales tax from retailers who aren’t physically in Florida must be collected on sales of “taxable items delivered to purchasers in Florida if the out-of-state retailer or marketplace provider makes a substantial number of sales into Florida.”
Businesses who make “substantial” remote sales are the ones with revenue exceeding $100,000 from online retail in the previous calendar year. Per the provisions of SB 50, sellers with substantial remote sales are now defined as dealers.
Along with this adjustment, several definitions in Florida’s laws have been updated or added, based on needs of the law.
What are the new definitions?
A marketplace is now defined as any physical place or electronic medium through which tangible property is sold.
Also, a marketplace provider is anyone who facilitates a retail sale by a marketplace seller through a listing or advertisement, and then collects payment from customers to send all or part of the payment to a seller, even if they receive compensation for providing that service.
Exceptions to the new marketplace provider, as defined by the state, include travel agents, delivery network companies, and payment processors.
A marketplace seller is someone who works with a marketplace provider to make retail sales of tangible personal property through a marketplace owned, operated, or controlled by the provider, according to the new law.
The law also grants a relief of liability for tax, penalty, and interest upon registration with the Department of Revenue by October 1, 2021. Any marketplace sellers who made remote sales or a marketplace provider with a physical presence in the state is relieved of liability.
Additionally, the state has made some adjustments to tax rates and revenue destinations based on the overall changes in the new law.
How much tax revenue could this generate for Florida?
A March 8 analysis of the bill submitted by the Senate’s Professional Staff of the Committee on Appropriations estimated that the General Revenue Fund could be increased by almost $1 billion in the coming Fiscal Year, $973.6 million, and an additional $1.08 billion each year after.
The analysis also estimates that the law will generate an additional $0.3 million for state trust funds in Fiscal Year 2021-2022, and $3.3 million each year after, as well as an additional $229.5 million for local government revenues in FY22 which could rise to $253.7 million in later years.
Additional revenue coming to the state’s Unemployment Compensation Trust Fund is expected to be delivered on or before July 25, 2021, Aug. 25, 2021, and Sept. 25, 2021. The Department of Revenue will expected to distribute $324,533,334 to the UCTF each of those months, “less an adjustment for refunds issued from the General Revenue Fund before making the distribution.”
If the refunds that are supposed to be subtracted from any of the three single distributions, the DOR may not make the distribution will have to take the money out of the remaining balance of the next distribution of funds.
Starting in July 2022, on or before the 25th of each month, DOR will distribute $90 million to the UCTF on a monthly basis. At the end of the last day of any month, if the UCTF exceeds $4,071,519,600, as verified by the U.S. Department of the Treasury, the Office of Economic and Demographic Research will certify to the DOR that the ending balance exceeds that amount.
All other proceeds collected from the new tax revenue must remain in the General Revenue Fund, according to law.