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Amazon to start collecting sales tax in Florida on May 1

Planning to buy something on Amazon? Better "add to cart'' now because the cost of most items is about to go up at least 6 percent for shoppers in Florida.

The online retail giant said Wednesday it will start collecting sales tax from Florida customers on May 1.

For many customers in Florida — including ones in Hillsborough, Pasco and Pinellas counties where the overall sales tax is 7 percent — that means the cost of a $16.95 book will go up by $1.19. In Hernando, where the tax is 6.5 percent, the increase will be $1.10.

"It will definitely discourage me from using Amazon,'' said Frank Mora of Ybor City, who makes about a dozen Amazon purchases a year. Instead, he'll search for other online retailers who don't collect the tax. "The bottom line for me is what's going to be the least expensive.''

Sales tax on Amazon purchases will generate an additional $70 million to $80 million a year in revenue for the state, a tiny fraction of the more than $20 billion in annual sales tax receipts statewide but still a significant amount for one company.

Retailers hailed it as a long time coming in ending an unfair price advantage for Amazon, which did $74.4 billion in sales in fiscal year 2013.

"I think it will go toward leveling the playing field for retailers in Florida,'' said Ray Hinst, co-owner of Haslam's Books, an 80-year-old independent bookstore in St. Petersburg. "It will help the brick-and-mortar stores.''

Statewide, lost sales tax revenue from e-commerce is estimated at more than $450 million annually. Amazon accounts for about 10 percent of all online sales in Florida.

Collecting sales tax comes as a result of Amazon establishing warehouses in Hillsborough and Polk counties for processing and shipping orders. Until now, the Seattle-based retailer hasn't had to collect sales tax from buyers in Florida because it didn't have a physical presence in the state.

Amazon spokesman Ty Rogers said Wednesday the company will be required to collect sales tax in Florida starting May 1 but wouldn't elaborate on the timing. The warehouses, known as fulfillment centers, aren't expected to start processing orders until the holiday shopping season later this year.

"As soon as they start hiring employees based in Florida, they are going to be triggering a lot of regulatory legal filings that are going to be creating physical nexus for them,'' said John Fleming, a spokesman for the Florida Retail Federation.

The issue of sales tax collection goes back to 1992 when the U.S. Supreme Court ruled a state can't require remote retailers without a physical presence to collect sales tax in that state. Buyers in Florida are still required to pay sales tax on purchases made over the Internet, but few do and many aren't even aware of the rule.

Amazon has been fighting state tax officials for years on the issue of sales collection and currently only collects the tax in 20 states. Overstock.com, an online home goods retailer, similarly has fought the sales tax issue and currently does not collect it in Florida.

In November, Amazon started building a 1.1 million-square-foot distribution center in Ruskin, near Interstate 75 off State Road 674. Once completed, the facility will employ up to 2,500 permanent and seasonal workers. Amazon has not started advertising for employees, but the county's top building official said that could start happening this summer.

The center will process small items, like books and CDs. The warehouse going up in Lakeland will handle large items.

Chris Brazzeal, general manager of Brazzeal's Tire and Service in Tampa, said he hoped that Amazon's collection of sales tax would lead to other retailers collecting the tax.

"For online tire wholesalers that are out of the state of Florida, they have $70 advantage over me automatically on a $1,000 set of tires,'' he said. "That can hurt a small, family-owned business like ours.''

Florida retailers have tried unsuccessfully for more than a decade to pass a law that would require out-of-state retailers to collect sales tax. The issue has gained support in recent years but has failed to gain traction among state legislators who argue it would amount to a new tax.

News researcher John Martin contributed to this report. Susan Thurston can be reached at sthurston@tampabay.com or (813) 225-3110.

Amazon to start collecting sales tax in Florida on May 1 04/16/14 [Last modified: Thursday, April 17, 2014 11:31am]
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