Avalara : Small businesses praise Avalara during Florida economic nexus hearing

The hearing for House Bill 15 opened with a high-level explanation of the issue. Staff Director of the Ways & Means Committee Vince Aldridge reminded that although businesses with no physical presence in Florida currently aren't required to collect Florida sales tax, those sales are still subject to tax. Residents are required to remit use tax to the Florida Department of Revenue when retailers don't collect sales tax on taxable transactions.

Aldridge also provided an overview of South Dakota v. Wayfair, Inc., the 2018 U.S. Supreme Court decision that overruled the physical presence rule, giving states the authority to require businesses with no physical presence in the state to collect and remit sales tax. The case centered on South Dakota's economic nexus law, which imposes a sales tax collection obligation on out-of-state businesses with more than $100,000 in sales or at least 200 transactions in the state in the current or previous calendar year.

The Wayfair opinion noted that 'South Dakota's tax system includes three features that appear designed to prevent discrimination against or undue burdens upon interstate commerce':

• South Dakota provides a safe harbor to those who transact only limited business in the state
• The economic nexus law ensures no obligation to remit the sales tax may be applied retroactively
• South Dakota is a member of the Streamlined Sales and Use Tax Agreement (SST), which standardizes taxes to reduce administrative and compliance costs

Aldridge also pointed out that Florida and Missouri are the only two states in the country with a general sales tax that haven't adopted economic nexus. And he noted that most states also have marketplace facilitator laws requiring marketplace facilitators to collect and remit sales tax on behalf of third-party sellers.

The floor was then opened to questions. Representatives from several Florida business urged the committee to 'level the playing field' by requiring out-of-state businesses to collect and remit Florida sales tax, as they must.