Have you heard someone say "If I make a purchase online, I do not have to pay Florida sales tax." Or what about "if I make a sale online, I do not have to collect Florida sales tax." These statements are becoming less true every day. With recent changes in the law, it is becoming standard practice for sellers to charge Florida sales tax on online sales to Florida. The trend of Florida sales tax being charged on more and more online purchases will most likely continue.
By way of background and only a short time ago, sellers would not have to charge sales tax on sales made into a state if that seller was not located in the state. This means purchasers were not paying sales tax on online purchases. The United States Supreme changed this long-standing practice. In South Dakota v. Wayfair, the Court held a state could require a company to collect sales tax if the company made a certain dollar amount of sales or number of transactions into the state. Since then, states have been implementing this approach. Florida appears to be one of them.
The Florida legislature is currently considering a bill that would force sellers not physically present in the state to collect Florida sales tax on online purchases to customers in Florida. The bill requires sellers who make $100,000 of sales or 200 transactions into the state to collect sales tax. If the bill passes, which I have a feeling it will, more online purchases will be subject to Florida sales tax. The same bill also requires a marketplace facilitator (think eBay) to collect Florida sales tax on online purchases if the facilitator meets certain criteria. For an in-depth discussion on the proposed bill, a link is included at the end of this article.
Even if you do not pay Florida sales tax on your online purchases, you may still owe tax. Similar to a sales tax, Florida has a use tax that is supposed to be on these untaxed online purchases. The use tax is something a purchaser must pay directly to the Florida Department of Revenue (“Department”) and file a return. If the purchaser is already a “dealer” with the Department, the purchaser can file a sales tax return with the Department and list its taxable purchases on the return and pay the tax then. If you are not a “dealer” with the Department, then you can pay the Florida use tax on your online purchases by filing Form DR-15MO, Out-of-State Purchase Return. A copy of the return is included at the end of this article.
What happens if sales tax was not charged on your online purchase and you did not pay use tax to the Department? If the Department catches you, you will owe tax, interest, and probably penalties. Generally, the Department can go back three years. In other instances, the Department can go back indefinitely. There is a way you can limit your exposure. A voluntary disclosure allows you to come clean with the tax liability. You pay the tax that is owed and some interest. Penalties are normally waived. In very certain situations, the tax and interest may be reduced. Best of all, you can rest easy knowing how long the Department can go back has been limited.
In conclusion, while Florida sales tax may not be due on online purchases shipped to individuals in Florida, the purchaser may have a use tax obligation. Not paying the use tax timely potentially creates a liability that can be cleaned up via the voluntary disclosure process. In the near future, sellers may have to begin collecting Florida sales tax on online sales to Florida. Failure to do so could cause the seller to have to pay the sales tax out of pocket instead of collecting the sales tax from customers.
About the author: David Brennan is an associate attorney with Moffa, Sutton, & Donnini, P.A. His primary practice area is multistate tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctor in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. While working for the Florida Department of Revenue as a Senior Attorney, David focused on various sales and use tax issues. You can read his BIO HERE.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
If you are interested in learning more about Florida sales and use tax, then you can find a listing of our up and coming speaking engagements HERE.
ADDITIONAL RESOURCES
Form DR-15MO, Out-of-State Purchases Return
AUTHORITY
South Dakota v. Wayfair, 585 U.S. _____ (June 21, 2018).
Section 212.05, F.S., Sales, storage, use tax.
ADDITIONAL ARTICLES TO READ
ANALYSIS OF FLORIDA ECOMONIC NEXUS BILLS, published December 20, 2019, by David Brennan, Esq.
FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, C.P.A., Esq.
FLORIDA - ECONOMIC NEXUS & MARKETPLACE FACILITATOR BILL IINTRODUCED, published February 20, 2019, by James Sutton, C.P.A., Esq.
POST-WAYFAIR - CAN YOU AFFORD TO WAIT TO REGISTER, published August 8, 2018, by James Sutton, C.P.A., Esq.
FLORIDA SALES TAX FORGIVENESS POST-WAYFAIR: AMAZON FBA SELLERS, published June 28, 2018, by James Sutton, C.P.A., Esq.
FLORIDA SALES TAX - VOLUNTARY DISCLOSURE PROGRAM, published April 9, 2018, by Jeanette Moffa, Esq.
FLORIDA USE TAX AUDIT LETTER?, published June 14, 2015, by James Sutton, CPA, Esq. and Jerry Donnini, Esq.
GO TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.