Florida Enacts Economic and Marketplace Nexus Legislation
Effective Date: July 1, 2021
Threshold: $100,000
Measurement Date: Previous calendar year
Includable Transactions: Taxable sales; Marketplace sales excluded from the threshold for individual sellers
When You Need to Register Once You Exceed the Threshold: Next transaction (state doesn’t specify)
Approaching three years after the South Dakota v. Wayfair decision, Florida has finally revised its sales tax nexus standards by enacting economic and marketplace nexus legislation. Effective July 1, 2021, remote sellers and marketplace providers will be required to register and collect Florida sales and use tax if, in the previous calendar year beginning with calendar year 2020, they have taxable remote sales in which the sum of the sales prices exceeds $100,000.
Florida defines “remote sale” as a “retail sale of tangible personal property ordered by mail, telephone, the Internet, or other means of communication from a person who receives the order outside of this state and transports the property or causes the property to be transported from any jurisdiction, including this state, to a location in this state.” Remote sellers and marketplace facilitators that meet the economic nexus threshold are relieved of tax liability, penalty, and interest due on remote sales that occurred before July 1, 2021 as long as the remote seller or marketplace facilitator registers with the Florida Department of Revenue before October 1, 2021.
The Florida legislation prohibits the Department of Revenue from using data received from registered marketplace providers or remote sellers to identify use tax liabilities of unregistered sellers on sales that occurred before July 1, 2021.
Florida defines “marketplace provider” as a person who facilitates retail sales for marketplace sellers by listing or advertising the marketplace sellers’ products in the marketplace, and who, directly or indirectly, collects payment from customers and transmits payments back to the marketplace sellers. The state specifically excludes travel agency services, delivery network companies, and payment processor businesses from the definition of marketplace provider.
A marketplace provider that exceeds the economic nexus threshold in Florida must certify to its marketplace sellers that it will collect and remit tax on taxable retail sales made through its marketplace. This certification can be included in the agreement between the marketplace provider and seller. There is liability relief for marketplace providers for uncollected or incorrectly collected tax on a marketplace seller’s sales if the marketplace provider can demonstrate the error was due to incorrect or incomplete information provided by the marketplace seller.
Individual marketplace sellers shall exclude sales made through a marketplace provider in determining their own calculation of economic nexus in Florida.
Florida’s legislation permits that a marketplace provider’s obligation to collect tax on behalf of its sellers be waived in certain circumstances. The marketplace provider and marketplace seller may contractually agree to have the marketplace seller collect tax and if the marketplace seller has US gross sales of more than $1 billion (including sales of all related entities), provides evidence to the provider that they are registered in Florida, and notifies the Florida Department of Revenue that the marketplace seller will collect and remit all applicable taxes, effective April 1, 2022.
Also effective April 1, 2022, a marketplace provider is required to collect and remit the prepaid wireless “911 fee,” waste tire fee, and lead-acid battery fee at the time of sale for taxable retail sales made through its marketplace. (S.B. 50, Laws 2021, effective July 1, 2021)