Tax Law

Florida Bills Model Sales Tax Nexus Proposals

As the 2013 state legislative season opens and states continue the never ending quest for new tax revenues, a large number of legislative proposals have been made to continue the recent trend of increasing the scope and breadth of sales tax nexus. As of the date of this posting, at least 13 states (Florida, Hawaii, Indiana, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, New Mexico, Oklahoma, Utah and West Virginia) have proposals currently being considered which would expand nexus for sales tax purposes to some extent in the respective states.

While these proposals all vary slightly, the proposal in Florida appears to be a model of the form of such proposals. Briefly, the Florida proposal (S.B. 316) would make the following changes:

  1. Modify definition of "mail order sale" to include sales of tangible personal property made via the internet.
  2. Require dealers who have nexus in Florida and meet one other factual characteristic to register and collect sales and use taxes. These factors include (this is not an exhaustive list): (a) Maintaining an office distribution facility, warehouse storage facility or other location to facilitate the delivery of property or services sold by the dealer; (b) Using trademarks, service marks, or trade names in Florida; or (c) Delivering, servicing, or installing the product in Florida.
  3. Impose a click-through nexus provision which establishes a rebuttable presumption of nexus if a dealer enters into an arrangement with a Florida resident whereby the Florida resident refers or links potential customers to the dealer's website for a commission or other form of compensation. The presumption is rebuttable, and only applies if cumulative sales from such linkage in the past 12 months were in excess of $10,000.

A similar bill has been introduced in the Florida House of Representatives (H.B. 497), but this bill also requires sales tax registration and collection by dealers without a physical presence who have activities conducted in Florida on their behalf to facilitate a sale. A dealer is not required to collect sales tax if sales from such activities are less than $100,000 per year.

Both bills are presently pending in committees at this time. Taxpayers in Florida and any of the other states currently considering such laws should closely monitor these proposals in order to insure that the proper compliance processes and systems are ready in the event that any or all of these bills become law.


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