As a matter of basic fairness, it’s time for Florida to collect internet sales taxes that are owed but go unpaid. SB 126, championed by Sen. Joe Gruters, R-Sarasota, as his top legislative priority this session, would bring in an estimated $380 million in fiscal year 2020-21 -- rising to nearly $1 billion in five years -- by requiring internet sellers who do substantial business in Florida to collect sales taxes. That’s just commonsense. It’s fiscally prudent, and it would finally be fair to local retailers who must already collect the tax.
This is not a new tax. It is simply fairly collecting a tax that is already owed. There are reasonable arguments to make it revenue neutral by reducing other taxes, particularly ones that affect small Florida businesses. Or to use it to help pay for Gov. Ron DeSantis’ proposal to pay all teachers at least $47,500 a year. Or for environmental initiatives. But what is not up for argument is that this tax already exists and should be paid, and these calculations from the Legislature’s revenue estimating conference show just how much money is at stake for Florida. Bizarrely, right now the burden can be on those who buy goods on the internet -- regular folks -- to make sure that happens. If the internet seller doesn’t collect it at the on-line checkout, the buyer is supposed to fill out sales tax paperwork and send the money to the state. Of course, that seldom happens.
The attitude toward collecting the tax on internet sales has been shifting rapidly. A 2018 U.S. Supreme Court case, South Dakota v. Wayfair, made it clear that it’s legal for states to charge taxes on internet sales and, in fact, only two states with sales taxes -- Florida and Missouri -- don’t collect them from all on-line retailers. And Missouri is planning to do so.
Nearly 6 years ago, Amazon agreed to start collecting sales tax on items it sold to people in Florida and 20 other states. Amazon had already begun building fulfillment centers in Florida, which gave it a physical presence in the state back when that was still the standard for owing sales tax. But while Amazon is a huge company, that didn’t solve Florida’s entire problem. In fact, 69 of the top 500 internet retailers fail to collect Florida taxes, according to the Legislature’s Office of Economic and Demographic Research. That may be only 14 percent, but 100 percent of them should be withholding the tax. Indeed, the tax isn’t always collected even for Amazon Marketplace items, which are not sold directly by Amazon.
The Gruters bill would apply to internet sellers making 200 or more sales a year in Florida or with sales that exceeded $100,000 in the previous calendar year, so mom-and-pop internet operations would be exempt. As chairman of the Republican Party of Florida, Gruters has influence. Indeed, his bill, and its House companion, HB 159, have bipartisan backing and the support of such heavy hitters as the Florida Chamber of Commerce. It’s time to pass this fair, commonsense legislation and level the playing field for all.
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