In the past, an online seller who sold to customers located in a particular state had to have some physical presence in that state before the state could require the seller to collect and pay state sales tax. However, the requirement for physical presence was overturned in the Supreme Court’s June 2018 decision in South Dakota v. Wayfair Inc.
Nexus in Florida
Unlike many other states, Florida has not updated its laws for Internet sellers in the wake of Wayfair. So at least for now, the only law actually on the books predates Wayfair and relates to so-called nexus.
Many states, including Florida, have used the term nexus rather than physical presence in their sales tax laws, regulations, or other official documents. In the process, these states have sometimes defined nexus in ways that could go beyond physical presence.
A more specific statement of what counts as physical presence under Florida law can be found among the various definitions of dealer (meaning a person or entity required to pay sales tax) in Section 212.06 of Florida’s sales and use tax law. More particularly, a dealer under this law includes “any person . . . who maintains or has within [Florida], directly or by a subsidiary, an office, distributing house, salesroom, or house, warehouse, or other place of business.”
Regarding nexus, Section 212.0596 of Florida’s sales and use tax law covers taxation of mail order sales and defines when mail order sales are subject to sales tax. The section includes this statement: “The dealer, by purposefully or systematically exploiting the market provided by this state by any media-assisted, media-facilitated, or media-solicited means, including, but not limited to, direct mail advertising, unsolicited distribution of catalogs, computer-assisted shopping, television, radio, or other electronic media, or magazine or newspaper advertisements or other media, creates nexus with this state.” In addition, the same section also states more generally that a dealer must collect sales tax if the dealer or the dealer’s activities “have sufficient connection” to the state to create nexus.
As a briefer and more readable option, the Florida Department of Revenue (DOR) has a webpage covering nexus for out-of-state businesses.
Florida Attorney General – Retroactive Collection
Florida is unlike many other states in that it never put into place what’s often called an Amazon law. These state laws required at least large Internet sellers like Amazon to collect and pay sales taxes. As examples, two of the largest states, New York and California put such laws in place in 2008 and 2012, respectively.
However, following the Wayfair decision, in the summer of 2018, Florida’s Attorney General asked a state court to allow the state to require out-of-state sellers to retroactively collect sales tax. As of the end of 2018, the matter has not yet been settled. If you sell into Florida via a website, the resolution of this matter might end up being important for your business. For additional information, check this article.
Proposed Federal Legislation
At the federal level, Congress has repeatedly considered legislation that would affect Internet retailers and how online sales taxes are collected in all states. In the wake of Wayfair, new proposed federal laws address minimum amounts of sales before a seller may be retroactively required to collect sales tax (Online Sales Simplicity and Small Business Relief Act of 2018 (H.R. 6814)) and barring states from retroactively requiring sellers with no physical presence in a state to collect sales tax (No Retroactive Online Taxation Act of 2018).
Final Words – For Now
With the exception of the action of Florida’s Attorney General in the summer of 2018, the Wayfair decision has not yet led to a change in Florida sales tax laws. However, many other states already have passed laws requiring what they often call remote sellers to collect sales tax. If those states are any indication, it may not be long before Florida, too, updates its laws to specifically require out-of-state sellers to collect and pay sales tax. Therefore, you should consider periodically checking in with Nolo’s website and the Florida Department of Revenue to see if the state’s rules have changed.