Florida is missing out on anywhere between $800 million and $450 million in uncollected sales tax from online sales, but because the state is not enforcing sales tax laws, all the state has is estimates for how much money it's missing.
Only stores with physical locations in Florida are required to charge sales tax for sales made in Florida, however, businesses outside of the state that sell into Florida are not required to charge tax, and most don't.
The Florida Department of Revenue provides a form online for residents to fill out and declare what they bought online and then pay the sales tax. Not only do most people not know this form exists, there is no enforcement for people who choose not to pay the tax.
"I do all of my shopping
online; it's much easier and faster," says Orlando father of two Mel Demetro, who admits he, like most Florida residents, doesn't pay the sales tax, because he didn't know he was supposed to. "If they don't charge me, I don't pay it."
Shoppers like Mel are in the overwhelming majority in Florida.
"We just need to modernize our
system and collect the taxes that are lawfully owed to the people of Florida," said Dominic Calabro, of the nonpartisian Florida Tax Watch. "It will help keep jobs in Florida, because all we are doing now is helping people sell into and invade our market."
Florida Tax Watch estimates in its 2013
Modern Management and Sensible Savings report that the state could save at least $220 million by enforcing sales tax compliance by online retailers. In the report, Florida Tax Watch highlights the problem of failure to collect sales tax as a jobs issue that places Florida retailers at a distinct disadvantage compared to out-of-state retailers: "A 6 to 7.5 percent price break is hard to overcome for Florida's retailers."
"Look how many jobs we're hurting in Florida for the brick-and mortar-retailers," says Calabro.
Online retailer Amazon.com, which reported $61 billion in sales in 2012, does not charge sales tax in
Florida but will soon be required to regardless of what Florida decides to do. Amazon is building a warehouse facility near Tampa.
Once it is constructed, the retail giant will begin collecting and remitting sales tax. But unless the state acts, other online retailers with physical locations outside of Florida will not charge sales tax to Florida residents.
Florida Tax Watch says even with modest tax returns from online sales, the state could lower taxes in other areas, providing a level playing field for all businesses while not increasing the overall tax burden on residents.
But Florida can't act alone. The federal Marketplace Fairness Act has been floundering in the U.S. House of Representatives for months. The Marketplace Fairness Act would give states the authority to collect sales tax from retailers even without a physical presence or nexus in the state, as long as they are part of the Streamlined Sales and Use Tax Agreement. The Florida Legislature still needs to pass legislation to fully bring the state into the Streamlined Sales and Use Tax Agreement, along with 44 other states. Once this standard is met, the state can collect the taxes.
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