The Florida Department of Revenue found that a taxpayer’s use of an independent consultant in Florida did not create nexus for Florida sales and use tax. The taxpayer is a limited liability company that makes interstate sales of general merchandise through the mail to customers located in Florida and other states. Florida law provides that a dealer who makes mail order sales must collect and remit Florida tax on such sales, when the dealer has agents in this state “who solicit business or transact business on behalf of the dealer.” Generally, the “transaction of business” on behalf of the dealer includes activities that further “the taxpayer’s ability to establish and maintain a market in this state”. However, the taxpayer claimed that it no longer maintains any place of business, inventory, or other property in Florida. In addition, the taxpayer does not have any employees, agents, or representatives in Florida soliciting sales orders or conducting any other business activities on behalf of taxpayer.
The Department would deem the following activities by a dealer’s representative or agent to create sales and use tax nexus: 1) the solicitation of orders; 2) the sale or acceptance of orders; 3) the acceptance of payments; 4) the delivery of merchandise; 5) the service of merchandise; or 6) the representation of the dealer in Florida through some other means. In this situation, the independent consultant provides services to the taxpayer’s personnel at its corporate headquarters and does not help the taxpayer develop a market for its products in Florida. Additionally, the consultant does not interact with the taxpayer’s customers or vendors and any work that the consultant performs in Florida on the taxpayer’s process improvement projects is invisible to the taxpayer’s customers. Therefore, since the consultant’s activities do not constitute any of the activities described above, the taxpayer is not obligated to collect and remit Florida tax on its mail order sales of tangible personal property, due to the use of this consultant. (Technical Assistance Advisement, No. 09A-058, Florida Department of Revenue, November 9, 2009)