Interpreting the Florida Online Sales Tax Law for Businesses

by Simplice Essou, CPA | June 1, 2022

The recent Florida sales tax law on Internet sales has created some confusion and led to many questions for small business owners. The new law created some controversy in Florida even though in most other states online shoppers have already been paying sales taxes on their purchases.

In this article we will try to shed some light on what it says and what that means for Florida-based businesses.

What the Law Says

The sales tax law that went into effect on July 1^, 2021, requires out-of-state retailers who have no presence in Florida and have more than $100,000 in online sales per year to charge a 6 percent sales taxes on sales to Florida residents.

The law exempts online sellers with less than $100,000 a year in sales in Florida from the new requirement.

Under the new law some businesses making remote sales into Florida must collect sales tax on sales to Floridians. This brings Florida in line with most of other states.

This law is not really new:  Before its enactment, Florida was already requiring its residents to pay taxes on their online purchases if the retailer did not do so. In reality, many Floridians are not even aware of that requirement and very few did it.

Companies with a physical presence in the state collected taxes, while others did not. According to lawmakers this new bill will bring in approximately one billion dollars in tax revenue per year into the state coffers.

In reality the new law is mostly concerned with “market facilitator” platforms such as Amazon, Etsy and EBay. Amazon for example was charging sales taxes on the sales of its products but not on sales made through Amazon by third parties. Now they have to charge sales taxes on all sales through the platform.

These platforms calculate and collect the sales taxes for sales made through them and send the collected taxes to the respective states.

What It Means For Florida Businesses

Florida businesses should not be concerned by the $100,000 limit. They still need to register with the Florida Department of Revenue, collect taxes, and send them to the state.  Florida brick and mortar businesses are likely to profit from this new law as it will allow them to compete better on equal footing with online sellers. Before the new law online sellers who were not charging sales taxes had an unfair advantage over Florida brick and mortar businesses. Florida businesses who buy materials or supplies online will see sales tax applied to the purchase prices of the items they buy online.

How to register to collect and pay taxes:

The Florida Department of Revenue prefers online registration even though it is possible to mail in a paper registration. To register online, click on online registration in the above sentence, create an account and register for a tax certificate.

You will need your business name and address, your EIN number obtained from the IRS website, name(s) and social security number(s) of the owner(s), and sunbiz.org registration date.

For more information, visit the Florida SBDC at USF online to gain access to a no-cost consultant.