FL Senate Amends Economic Nexus & Marketplace Facilitator Bills

On March 25, 2021, the Florida Senate amended Senate Bill 50 to include other state and local tax related changes which should directly benefit Florida businesses while shifting the burden of recouping pandemic-related lost revenue to out-of-state businesses that make sales in Florida.

Florida is one of the last states to impose sales tax collection obligations on out-of-state, or remote, sellers by adopting economic nexus legislation after the 2018 South Dakota v. Wayfair case. In Wayfair, the Supreme Court held that states could assess remote sellers when they made sales surpassing certain economic thresholds. Specifically, South Dakota required remote sellers to register and collect sales tax when businesses made sales into South Dakota exceeding $100,000 or 200 separate transactions within a calendar year. In the last two and a half years, nearly every state with a sales tax has moved forward with enacting economic nexus legislation of their own, although the specific threshold amounts have varied and some states have dropped the transaction count threshold altogether.

Florida’s Senate Bill 50 has adopted the same threshold as South Dakota, requiring businesses located outside of Florida to register for and collect sales tax when annual sales exceed $100,000 or 200 separate transactions. In addition, Senate Bill 50 requires marketplace facilitators to collect tax on behalf of their third-party sellers when marketplace platforms exceed the same thresholds. As the bill progressed through the legislature, however, lawmakers saw an opportunity to give back to Florida businesses. Ultimately, Florida’s revenues will increase dramatically once the state is able to collect sales tax on purchases made from remote businesses. Resultingly, Florida lawmakers decided to cut Florida businesses some slack on their state tax obligations. This comes at a great time for many Florida business owners, who have been particularly hard-hit by the pandemic and associated shutdowns because our state relies so heavily on tourism.

Reemployment Tax

It is no secret that record numbers of Americans applied for unemployment benefits during 2020. While these benefits were necessary for many Floridians, they come with a price: increased reemployment tax. Between March and November 2020, the Florida trust for unemployment went from more than four billion dollars to less than one billion dollars. Essentially, Florida residents depleted the state’s unemployment reserve.

As businesses reopen and face the consequences of 2020’s economic fallout, they were concerned about two increased costs: (1) an increase in minimum wage from $8.65 per hour to $10 per hour; and (2) an increase in reemployment tax obligations. Specifically, reemployment taxes, which were $7 per employee in 2020, were set to increase to $20 per employee in 2021. Worse yet, that rate was set to increase to $80 per employee in 2022. With increased labor costs and reemployment tax set to increase by more than ten times its current rate by 2022, struggling business owners sought relief from the legislature. Fortunately, the legislature heard the concerns of Florida business owners and have adjusted Senate Bill 50 to address the problem.

The new addition to Florida economic nexus bill keeps the reemployment tax rate at $7 per employee. Florida business owners will save over $700 million by eliminating the reemployment tax rate increase. So how will Florida replenish its depleted unemployment benefit reserve? Florida lawmakers included the requirement that $90 million of sales tax revenue from remote sellers would be deposited into Florida’s trust for unemployment each month until the fund returns to its pre-pandemic amount of $4 billion. Why make Florida businesses pay when you can make out-of-state businesses pay? It is no different than what almost every other state in the country has done when they enacted economic nexus. Florida just waited to seek the additional revenue until it was desperately needed.

The Bracket System

When calculating sales tax, Florida currently requires taxpayers to use the “Bracket System.” The Bracket System addresses rounding when calculating sales tax on transactions that result in a fraction of tax due. For example, if the state and local tax combines sales tax rate is 7% and you make a purchase of $100, the tax due is unquestionably $7. However, purchase prices are not always whole numbers. In the case where a purchase price is $100.05, this amount multiplied by the 7% sales tax rate results in $7.0035 in tax due. When rounding, most people would naturally round to $7 of tax. However, the Department “misses out” on a fraction of tax on each transaction where this occurs. Resultingly, they imposed the Bracket System on Florida taxpayers.

The bracket system attaches a tax amount to transaction amounts that end in a fraction. If the amount ends in $.10-$.16, the assigned tax rate is $0.01. Meanwhile, if the transaction amount ends in $.17-$.33, the sales tax imposed is always $.02. Businesses that make large dollar amount sales, such as those that sell automobiles or high-end technology, are not very affected by the bracket system because rounding up one cent does not materially affect the total sales tax due when the tax due is in the hundreds or thousands of dollars. However, businesses that generally make a large volume of low dollar amount sales can be more substantially affected by the bracket system over a three-year audit period if they have rounded down the sales tax on thousands of transactions.

The bracket system catches most taxpayers off guard, as we all learned how to round in elementary school. If a number is .004 or below, it rounds to zero while .005 and above rounds to .01. The bracket system is counterintuitive and affects certain types of businesses more than others. Furthermore, the increased tax obtained by the Florida Department of Revenue from the bracket system is likely outweighed by the cost in enforcing it. Fortunately, Florida lawmakers have heard their constituents’ complaints and added a removal of the bracket system to Senate Bill 50. Going forward, sales tax would round the way we were taught to round numbers in school. If below five, the number rounds to zero while five and above rounds to one. Therefore, if you purchase an item for $0.50, you will owe $.04 in tax in a county where the tax rate is 7%. Alternatively, if you purchase an item for $0.33, you will owe only $.02 in tax.

Commercial Rent

Florida is notoriously the only state in the country that imposes a direct sales tax on commercial lease pursuant to section 212.031, Fla. Stat. This unpopular tax is one that is easy to assess and one that Florida business owners are often not prepared for. As a state that promotes itself as business-friendly, Florida lawmakers thought imposing this strange and costly tax on businesses seemed out of character. While the sales tax rate on commercial leases was originally the same rate as sales tax on other transactions, the legislature has slowly been reducing the sales tax rate on commercial leases over the last several years.

While the Senate has been modifying Senate Bill 50 to offer relief to Florida businesses, the House of Representatives will not be upstaged. As of March 30, 2021, the House Commerce Committee has now added new language to Senate Bill 50’s companion bill, House Bill 15, to reduce Florida’s sales tax rate on commercial leases from its current rate of 5.5% all the way down to 2%. This would result in massive savings for any Florida business engaged in a commercial lease. However, unlike the changes identified above, the commercial lease sales tax rate change would not go into effect immediately. Rather, it would only go into effect once the Florida trust for unemployment returned to its pre-pandemic level exceeding $4 billion.

While Florida looks to remote sellers to refill its coffers after the pandemic depleted them, the legislature seems to anticipate such an influx of revenue that it is willing to simultaneously offer Florida businesses significant tax breaks while they recover from their own pandemic losses. But will these bills pass in their current form? We should know very soon.

Florida economic nexus; Florida nexus; Florida marketplace facilitator; Florida sales tax attorney; Florida sales tax auditABOUT THE AUTHOR: Jeanette Moffa is an attorney in the Fort Lauderdale office of Moffa, Sutton, & Donnini, P.A. She focuses her practice in Florida state and local tax, with an emphasis on sales and use tax. Jeanette provides SALT planning and consulting as part of her practice, addressing issues such as nexus and taxability, including exemptions, inclusions, and exclusions of transactions from the tax base. In addition, she handles tax controversy, working with state and local agencies in resolution of assessment and refund cases. You can learn more about Jeanette HERE.

ABOUT THE FIRM: 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.


Section 212.031, Fla. Stat.

Senate Bill 50 – As Amended 3/25/2021

House Bill 15 – As Amended 3/30/2021


2021 FLORIDA ECONOMIC NEXUS LEGISLATION, by James Sutton, Esq., published February 1, 2021

2021 FL Reemployment Tax (RT) minimum rate Increased to .29%, by Matthew Parker, Esq., published January 6, 2021

2021 Florida Sales Tax Commercial Rent, by James Sutton, Esq., published December 30, 2021

Florida Sales and Use Tax Audits, by Steve Middel, published September 21, 2020

FL Sales Tax: How to Settle with the Tax Man – Part 1, by James McAuley, Esq., published November 1, 2020