FL Senate Moves Toward Adopting Economic Nexus and Marketplace Facilitator Statute

It took a pandemic for business-friendly Florida to move forward with the recent trend in US state and local tax to enact economic nexus and marketplace facilitator statutes. Facing revenue shortfalls due in large part to the halt in tourism and tourism-adjacent industries, Florida has decided to recoup the lost revenue from out-of-state businesses rather than increase taxes on Florida businesses. The legislation, Senate Bill 50 and its companion bill, House Bill 15, are moving quickly through the legislature. Senate Bill 50 was originally introduced on December 18, 2020, and has since been updated on February 22, 2021, and March 8, 2021. Meanwhile, House Bill 15 was originally introduced on November 30, 2020, and was modified on March 15, 2021. The anticipated start date of these new statutes will be July 1, 2021.

Economic Nexus – A History

Prior to 2018, states could only impose their sales and use tax laws on businesses that had a physical presence within the state. With the rise of e-commerce, online sellers with less overhead had the additional advantage that they did not have to charge sales tax on their sales. Meanwhile, brick-and-mortar stores had significantly more overhead and also had to charge sales tax, putting them at a severe disadvantage. However, it was not just the brick-and-mortar businesses that were suffering. As consumers switched to e-commerce for better prices, tax savings, and convenience, states increasingly were losing sales tax revenue they would otherwise have received from the purchases made by their residents.

In 2018, the Supreme Court of the United States (“SCOTUS”) determined in South Dakota vs. Wayfair, that states could require out-of-state, or remote, businesses to collect and remit sales and use tax when remote businesses made sales in excess of certain thresholds. South Dakota’s threshold was $100,000 in sales or 200 separate transactions into the state within a year. Businesses who met either of those thresholds would be required to register with South Dakota and collect and remit sales tax going forward.

Interestingly, SCOTUS did not specify which minimum threshold states must abide by, leaving states free to determine their own thresholds. As soon as the ruling on South Dakota vs. Wayfair came down, states rushed to enact economic nexus statutes that primarily mirrored South Dakota’s thresholds. In the chaos that ensued as overwhelmed state and local taxing authorities attempted to process unprecedented numbers of registrations, some of the larger states reevaluated their thresholds. California and New York both changed their thresholds to $500,000 in sales to eliminate smaller businesses from their tax base. Meanwhile, many states dropped the “200 separate transactions” and kept the sales threshold to eliminate small online businesses, such as Etsy shops, where many low dollar amount sales can be made. From the states’ perspective, the juice just wasn’t worth the squeeze to administer their state and local sales taxes to small businesses whose tax collection would be insignificant.

By the end of 2018, many states had already enacted their own economic nexus statute. Meanwhile, by the end of 2019, nearly every state with a sales tax had imposed economic nexus laws on remote sellers. In March 2020 when COVID-19 pandemic swept across the United States, only Florida and Missouri had not enacted economic nexus on remote sellers. How could a large state like Florida pass up on sales tax from businesses all over the country? While there is much speculation on the matter, two theories seem to prevail: (1) Florida is a business-friendly state that does not want to seem aggressive in terms of the taxes it imposes on businesses both within and outside the state; and (2) Florida simply did not need the money, as the state is quite solvent compared to New York and California, which operate at staggering deficits each year despite their high taxes. However, regardless of why Florida resisted economic nexus, remote sellers benefited for over two years by having a tax-free, competitive advantage over local businesses while Florida residents enjoyed cheaper online prices.

Marketplace Facilitator Statutes

As states began imposing tax on remote sellers, the question of how to treat sales made through marketplaces quickly arose. For example, on Amazon.com, a customer can make a purchase directly from Amazon or they can make a purchase from a third-party seller. Generally, when making these purchases, they look the same. Unless the customer looks carefully, they likely have no idea whether their purchase is direct from Amazon or from a third-party seller. Estimates show that roughly 3.3 million new third-party sellers have joined Amazon since 2017 alone. States had to decide whether they wanted millions of individuals registering with their taxing authorities and remitted small numbers of tax or whether they wanted Amazon to collect and remit sales tax on behalf of all sellers.

There was no question which option was preferable, but technically Amazon is not the retail seller of third-party sales. Therefore, the only way to require Amazon to collect sales tax, and consequently avoid mass registrations from third-party sellers, was to pass a special statute specifically imposing the tax collection obligation on Amazon.com and other marketplaces, such as Walmart.com, Ebay.com, for sales made through their platforms. These statutes, known as marketplace facilitator statutes, were interestingly advocated for by Amazon and other online marketplaces. Not only is it efficient to streamline their sales tax compliance by collecting and remitting for all their online sellers, but online marketplaces could charge their third-party sellers for the service of doing so. Ultimately, online retailers could use this to ease their tax compliance burden while simultaneously profiting from a new stream of revenue from their third-party sellers.

Florida’s Economic Nexus and Marketplace Facilitator Statutes

Despite its strong economic status, tourism-dependent Florida could not survive the pandemic unscathed. In the 3rd quarter of 2020, the US Department of Commerce, Bureau of Economic Analysis released personal income data by state, which showed Floridians had a -4.8% growth over the prior quarter. The national average was -10%, meaning Floridians had bounced back in the summer better than other states. This recovery was no doubt in large part due to Governor DeSantis’s position to keep the state and its businesses open so Florida residents could return to work. However, even if Florida residents appeared to recover faster than other states, that is not necessarily reflective of the economic status of the entire state. While Florida enjoyed almost 130 million tourists in the 2018-2019 fiscal year, that number was down to 108 million for the 2019-2020 fiscal year. With the loss of tourists came not only the loss of jobs, but with a large loss of sales tax revenue. Ultimately, while Floridian’s income bounced back better than other states, the state still struggled financially because the tourists who come to Florida and make taxable purchases abruptly stopped coming at the end of the 2019-2020 fiscal year.  

In the face of these revenue shortfalls, Florida’s legislature is finally motivated to pass economic nexus and marketplace facilitator statutes. However, Senate Bill 50 was not Florida’s first attempt to pass these statutes. In fact, the whole time Florida was largely opposed to economic nexus, there were still some within the legislature who attempted to move legislation forward.

The first attempt at adopting a $100,000 or 200 transaction economic nexus threshold and marketplace facilitator statute came in the form of Senate Bill 1112 and was set to have an effective date of July 1, 2019. This bill was initially indefinitely postponed and withdrawn from consideration before it died in appropriations on May 3, 2019. Next, House Bill 159 and Senate Bill 126 attempted to adopt the same economic nexus thresholds and tax collection requirements on marketplaces with an effective date of July 1, 2020. These bills were similarly indefinitely postponed and withdrawn from consideration. House Bill 159 died in the Ways and Means Committee on March 14, 2020, while Senate Bill 126 died in Appropriations on March 14, 2020.

Despite the statutes’ lack of support, the tides turned in Florida when Senate Bill 50 was filed on December 18, 2020. The bill was found favorable by Commerce and Tourism committee, which voted 11 Yeas and 0 Nays on January 25, 2021. Following that landslide, the Finance and Tax committee similarly voted 8 Yeas and 0 Nays on February 18, 2021. On March 4, the Appropriations also voted 18 Yeas and 0 Nays. As of March 11, 2021, Senate Bill 50 is retained on the special order calendar to be considered by the full Senate this week. Meanwhile, Senate Bill 50’s companion bill, House Bill 15, was approved March 11, 2021, by the Ways & Means committee. House Bill 15 also includes an elimination of the significant reemployment tax increase that was set to go into place this year, offering relief to Florida taxpayers while seeking an influx of revenue from out of state. It appears economic nexus is finally coming to Florida.

undefinedJeanette 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.

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.


Senate Bill 50 – As Amended March 8, 2021

House Bill 15 – As Amended March 15, 2021


2021 FLORIDA ECONOMIC NEXUS LEGISLATION, by James Sutton, CPA, Esq., Published on February 1, 2021


FL DOR Denying Your Sales Tax Registration? by Jerry Donnini, Esq., Published April 12, 2014


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