TAX NEWS - 2010

Florida Tax: Tax Internet sales

Florida Legislature missed another chance to collect

Florida will miss out on $1.2 billion this year in uncollected sales taxes from out-of-state businesses like Amazon or eBay that woo their customers on the Internet.

By 2012, Florida is estimated to lose more than $1.5 billion, based on an analysis by the University of Tennessee and other studies.

This year, Florida could have started to collect its fair share of sales tax by joining the Streamlined Sales and Use Tax Agreement, a compact of 22 states that have agreed to a unified approach in calculating taxes on sales items so that remote sellers collect it.

Florida buyers should pay the tax to the state when they buy items on the Internet, but the reality is few know they have to do so, and a loophole in federal law does not require out-of-state companies to collect the tax. The streamlined agreement has become a way to start making those collections.

Yet the Legislature once again failed in its responsibility to level the playing field for in-state businesses that follow the law and collect sales taxes while Internet sales go virtually untouched. Florida is among 20 states that support such collections but have yet to pass a law to get sales tax calculations in line with the streamlined sales tax agreement.

Some resistence is stubbornly ideological. State's rights conservatives don't want a compact of states dictating to Florida. But such arguments fall flat when you consider that they are hurting home-grown businesses, the ones that follow the law and collect the sales tax -- whether at their store or on a purchase made by a buyer on their website.

A Florida TaxWatch analysis estimated 100,000 Florida jobs were lost to untaxed web sales in 2008. Hollywood-based BrandsMart USA President and CEO Michael Perlman astutely notes: "The remote sellers that I'm competing with are not cheaper on the merchandise, they are selling tax evasion. That's their discount."

A stumbling block this year also seemed to be a misplaced fear that fixing Florida's tax structure would mean a dip in tax collections the first year. For example, some things like juice are taxed differently in each state depending on whether it is pure juice or watered down. Another discrepancy: compact states round "down" on half-penny collections while Florida uses a bracket system that tends to round up to a full penny. Yet TaxWatch offered a fix that would have meant no revenue losses and set Florida on the road to parity.

Instead, legislative leaders left Florida in the lurch again.