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What you should know about Florida's new online sales tax law

Ron Hurtibise, South Florida Sun Sentinel on

Published in Business News

Florida on Monday enacted a new law requiring out-of-state online merchants to collect and remit sales tax, which supporters say will bring in an additional $1 billion a year that previously went uncollected. Here’s what it means to consumers.

What changes?

Online shoppers will have to pay sales taxes in cases where they weren’t. The law requires online merchants who have no presence in Florida to charge the tax to Florida residents who buy from them.

How much will that cost me?

About $40 to $50 a year on average, says Jared Walczak, researcher for Tax Foundation, a nonprofit tax policy advocacy organization. We’ve been paying $70 to $80 a year up to this point for online purchases from retailers, such as Target and Best Buy, that have a physical presence in the state. Prior to the 2018 Supreme Court ruling, retailers without a physical presence in the state were not required to collect sales taxes.

Is this a new tax?

 

Not technically. Florida law has long required consumers to voluntarily remit unpaid sales taxes on purchases if those sales taxes were not collected by the seller. Few consumers were aware of this requirement, few complied, and the state did little to enforce it. As a result, consumers remitted only about 2% of what they owed.

Why did Florida enact this?

Business groups, including Florida TaxWatch and Florida Retail Federation, have been urging the state to enact the law since 2018. That year, the U.S. Supreme Court ruled in South Dakota vs. Wayfair that states can require online businesses to collect sales taxes even if they do not have a physical presence in the state. After the ruling, most states quickly created laws or rules requiring sales tax collection by out-of-state online retailers. By the time Florida enacted its law, 43 other states had such laws on their books.

Why do business groups favor this?

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