Florida Governor Ron DeSantis has signed legislation requiring marketplace providers and out-of-state retailers with no physical presence in Florida to collect sales tax on sales of taxable items delivered to purchasers in Florida, if the marketplace provider or out-of-state retailer make sales exceeding $100,000 during the previous calendar year. The legislation provides that every person making a substantial number of remote sales is a dealer required to register to collect sales and use tax.
- “Dealer” includes a retailer who transacts a substantial number of remote sales or a marketplace provider that has a physical presence in Florida or that makes or facilitates through its marketplace a substantial number of remote sales.
- “Remote sale” means a retail sale of tangible personal property ordered by mail, telephone, the internet, or other means of communication from a person who receives the order outside of Florida and transports the property or causes the property to be transported from any jurisdiction, including Florida, to a location in Florida. Tangible personal property delivered to a location within Florida is presumed to be used, consumed, distributed, or stored to be used or consumed in the state.
- “Substantial number of remote sales” means any number of taxable remote sales in the previous calendar year in which the sum of the sales prices exceeded $100,000. The legislation first applies to remote sales made or facilitated on or after July 1, 2021, by a person who made or facilitated a substantial number of remote sales in calendar year 2020.
Tax rate on commercial real property rentals
The legislation also provides that two months after the Unemployment Compensation Trust Fund reaches $4.07 billion, the tax rate on rental or license fee for use of real property is reduced from 5.5% to 2% under Fla. Stat. § 212.031.
Bracket collection schedule replaced with algorithm
In addition, the legislation requires that sales and use taxes be calculated based on a specified rounding algorithm, rather than specified brackets. The legislation repeals the bracket collection schedules in Fla. Stat. §212.12(9) and Fla. Stat. §212.12(10). Instead, a dealer must calculate the tax due on the privilege of the use, consumption, storage for consumption, or sale of tangible personal property, admissions, license fees, rentals, and upon the sale or use of services, based on a rounding algorithm that meets the following criteria:
- the computation of the tax must be carried to the third decimal place; and
- the tax must be rounded to the whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four.
A dealer may apply the rounding algorithm to the aggregate tax amount computed on all taxable items on an invoice or to the taxable amount on each individual item on the invoice. For the period of July 1,2021, through September 30, 2021, a taxpayer may calculate the tax due using either the algorithm or by applying the appropriate bracket system. Beginning October 1, 2021, only the algorithm method must be used.
For additional information, click through to view SB 50 and the recent publication by the Florida Department of Revenue.