This month, May 2014, Amazon was welcomed with open arms to the sunshine state. Florida should be happy by its theoretical increase as Amazon will begin charging, collecting and remitting tax in Florida. Sparking the collection agreement was the fact that Amazon has built two large distribution centers in Florida, which gives it the fatal sales tax nexus. For customers, this means that they will be charged the 6% state sales tax rate plus the local sales surtax rate, which can run between 0% and 1.5%.
As stated above, Amazon is building two fulfillment centers in Florida, creating more than 3,000 jobs. The locations will be on Florida’s west coast. Specifically, the centers will be just outside of Lakeland (East of Tampa and South of Orlando) and Ruskin (South East side of Hillsborough County). The project should also be a boom for the local economy and allow all Florida customers to get Amazon’s products much faster as we patiently await personal drone delivery.
Despite numerous rumors, Amazon’s new duty to collect Florida tax does not create a new tax. Rather, if you purchase a taxable item online (in any state) and tax is not charged, then you have a duty to remit the use tax yourself. That being said, I regularly speak at sales tax seminars and the audience typically laughs when I ask how many people actually participate in this routine. For example, in Florida, a consumer can report and pay Florida use tax on a Form DR-15MO (shown below), which can be found on the Florida Department of Revenue’s web site. However, I would be curious to hear how many Florida residents have ever seen this form let alone filed one.
It will be interesting to see the impact this duty has on Amazon in Florida. In fact, Ohio University performed a recent study and found Amazon sales plummeted about 10% in states in which it started charging and collecting tax. This percentage grew to 24% for purchases over $300. Interestingly, in the same states, brick-and-mortar sellers only showed an increase of about 2% in sales. One can only infer that rather than turning to the brick-and-mortars, customers are cognizant of which online retailers do not charge state sales tax and go to them for the sales tax savings. Until federal legislation is passed, one can stand to assume that customers will not remit a use tax. Therefore, it is also logical why Amazon is pushing for online legislation that requires everyone to collect.
About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law Moffa, Gainor, & Sutton, based in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini received his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email JerryDonnini@Floridasalestax.com or phone at 954-642-9390. Please also visit his other sales tax blog, facebook, and Twitter