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Closing this loophole could net Florida $700 million in sales taxes

Lawmakers are looking to require nearly all online retailers collect sales tax. But much of the gain would go to other tax breaks.
Published Apr. 17, 2019

The retail giant Amazon was one of the first online companies to start collecting sales tax in Florida five years ago.

Now, Florida lawmakers want Amazon’s competitors to catch up.

A potential Senate tax package (Senate Bill 1112) would require nearly all online retailers start collecting Florida sales taxes, netting the state roughly $700 million in revenue it currently doesn’t collect.

But much of the money would be given away by other tax breaks.

Currently, Floridians who buy products from sites like Wayfair, Etsy and Amazon’s third-party sellers usually don’t pay Florida’s 6 percent sales tax. Instead, Floridians are supposed to pay the sales tax directly to the state, which they usually don’t do.

“We’re making our average, everyday citizens guilty of not paying their taxes,” Sen. Joe Gruters, R-Sarasota, who is sponsoring the bill, said Tuesday, before it passed its second committee.

Requiring nearly all online retailers collect the tax would fix the problem. But Gruters, who is also chairman of the Republican Party of Florida, is careful not to call it a tax increase.

“Some people say this is a tax increase,” he told fellow senators on Tuesday. “It’s not. It’s a tax that’s currently owed.”

The idea is in response to a Supreme Court ruling last year that threw out the idea that a company had to have a physical presence in a state before the state could require it to collect sales taxes.

It would net an estimated $700 million for the state, according to Gruters. Online companies that sell at least 200 items or $100,000 worth of items in Florida would have to collect the tax.

But under Gruters’ bill, much of the money would be given away through a slew of tax cuts, including:

  • Cutting the tax on rent for commercial properties from 5.7 percent to 3.5 percent,
  • eliminating the ad valorem tax on heavy equipment rented by a dealer,
  • creating a 14-day sales tax holiday for disaster preparedness supplies, and
  • providing a tax cut to insurers that cover remote visits with doctors, known as “telehealth."

Just how much of the $700 million would make it into state and local coffers is unclear, though. The bill still has another committee stop to go before making it to the Senate floor.

“This is probably one of the most important bills of this session,” Gruters said. “I hope we can be the voice of reason and pass this bill.”

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