Posted on April 26, 2021
On April 8, 2021, the Florida legislature passed the long-anticipated economic nexus and marketplace facilitator bill in response to the South Dakota v. Wayfair ruling. Since the U.S. Supreme Court made their decision in South Dakota v. Wayfair, Inc. in 2018, Florida had been one of the last two states (Missouri being the other) who, before April 8th, had not passed legislation regarding economic nexus. Economic nexus laws impose tax collection and remittance duties on out-of-state sellers meeting gross sales and transaction volume thresholds. In other words, you do not need a physical presence in a state to be liable for sales and use tax.
On April 19, 2021, Florida Governor Ron DeSantis signed into law the economic nexus legislation passed on April 8th. Effective July 1, 2021, the newly established Florida economic nexus law will require remote (out-of-state) sellers and marketplace facilitators, most notably Amazon sellers, who made sales of $100,000 or more into the state during 2020 to collect and remit sales tax in Florida where they previously did not have these requirements due to lack of physical presence. While many states have a transaction threshold and dollar threshold, Florida decided to move forward with only a monetary threshold of $100,000, which is common among states.
The bill provides sales tax amnesty for taxpayers on remote or marketplace sales made prior to July 1, 2021, as long as sellers are registered by October 1, 2021, and did not have nexus prior to July 1 due to connections outside of the exceeding of economic thresholds. This is a crucial distinction from other states with economic nexus laws as this means that taxpayers who do not register timely have the potential to incur tax obligations retroactive to the effective date of the new law.
The signing of this bill by the governor will bring about $1 billion in revenue to the state, which has experienced decreased revenue due to the COVID-19 pandemic. The new revenue will be applied to the state’s unemployment trust fund and will then move towards reducing the state’s commercial rent tax to further assist businesses operating in Florida.
Tips for the Taxpayer
Remote sellers and marketplace facilitators should review their current and prior year sales to determine whether they have economic nexus by passing the threshold in Florida. If sales amounts have surpassed the $100,000 threshold in 2020, sellers should evaluate their economic nexus in Florida. The prior year (2020) will be used to determine if the threshold has been met on July 1, 2021.
Additionally, it is essential considering the limited safe harbor window for registration that taxpayers 1) confirm they did not have any other form of nexus in Florida prior to July 1, 2021; 2) prepare their operations and systems for tax collection; and 3) ensure they are officially fully registered with the state prior October 1, 2021
Allyn International recommends consulting a tax professional to help determine the next steps for your business if you find yourself affected by this newly enacted legislation.
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Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of Federal, multi-state and local tax compliance and consulting for large US and global corporations.
Allyn regularly conducts nexus reviews for our clients allowing us to assess your tax circumstances and help you make the best decision for your business. Our significant expertise in this area means you can focus on your core business while we focus on ensuring you are paying your fair share in taxes and not a penny more.
Contact us and we can provide a customized cost-effective solution to meet your company’s needs. For further information on Allyn Tax services, please contact: firstname.lastname@example.org
For More Information
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Contributors: Brerly Perez and Meghan O’Hehir
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