While we are still recovering from the unique twist of the new Colorado Internet sales tax, Affiliate Advocacy has learned of another unique bill surfacing in Florida. Florida is the latest state to introduce Internet sales tax legislation and this bill has a very different approach.
Since last summer, Florida has been one of those states that Affiliate Advocacy put at a high risk of Internet sales tax legislation being introduced. We based this on the large number of politicians talking publicly about Florida Internet sales tax and the need to level the playing field between online retailers and brick and mortar stores. Over the past year or so, several legislators have stated they are in agreement that Florida needs to beef up collection of online sales tax.
Two bills (identical bills, one in each House) have now been introduced in Florida that take a different approach to implementing Internet sales tax in Florida. Legislators are now proposing that the Department of Revenue develop and implement Internet Sales Tax Automated Revenue Tracking (iSTART). With this proposal, software will be developed that will have credit card companies collecting and remitting the sales tax for merchants and residents at the time of purchase. There are already several companies that automate sales tax collection so it probably won’t take long for the DOR to design or find an acceptable program. It remains to be seen how merchants and credit card companies will feel about HB 1443 (Representative Kevin Ambler) and SB 2552 (Senator Thad Altman).
Although there is likely to be opposition there is some appeal. It is also a big improvement over the Colorado law which I think will be a nightmare for merchants. I can see HB 1443 / SB 2552 gaining momentum as the legislation includes a 1% reduction in sales tax rate once revenue from iSTART reaches $5 billion annually. The addition of this provision will probably appeal to many legislators and citizens.
You may feel that this legislation only impacts merchants and has no affect on Affiliates. Remember, as you have seen over the past couple of years, legislation not only evolves, it sparks other legislation. So, keep an eye on these two bills and continue to watch for other bills that more directly impact affiliate marketers.
What will they thinks of next?
{ 8 comments… read them below or add one }
Melanie, do you have a link to those bills?
I’m not clear exactly (imagine that with such convoluted legislation!) on what these bills are exactly proposing:
a) Sales tax collection (as is already happening) would shift from merchants collecting to credit card companies collecting or
b) Sales tax would start being collected for all sales to residents in the state of FL, regardless of whether or not the merchant had an established nexus in FL
c) both of the above
d) none of the above
Is this for internet sales only and not brick-and-mortar stores? What happens if you pay in cash? LOL. Via Paypal?
I can just imagine the fees credit card companies will pass on to their merchants if they have to become tax collectors. They hit merchants hard as it is. Of course, the merchant then passes it on to consumers who are now paying more at the merchant & increase sales tax.
And I can just imagine what files sales tax returns will look like in FL..with multiple collection sources for each merchant (merchant and credit card).
I’ll stop now…what a mucked up idea. I’m beginning to think politicans have gone completely bonkers! Such convoluted legislation coming out in attempt to bypass Supreme Court rulings. A shame.
Thanks Kellie, I added links to the bills in my post to make it easier.
It is an interesting approach, certainly removes one “burden” aspect of collecting but I think it adds another. I have to read through it all again, there’s still some unanswered questions on the details of how it would work.
I emailed a couple of connections in Florida, hoping to get a feel for where legislators stand.
Ladies,
I work for Representative Ambler and would be happy to have the Rep. answer any questions you may have regarding the Representative’s bill. Legally, Florida residents who make purchases from out-of-state online retailers and portals are supposed pay taxes for online purchases if the business does not collect it at the point of sale. What Rep. Ambler’s bill does, however, is propose a way to enforce something which was previously very difficult to enforce. Enforcing laws currently on the books is way to make up for some of the state’s projected $3.2 billion budget shortfall for 2010-11 without further raising taxes. Some analysts estimate that Florida loses as much as $2 billion every year on such Internet purchases from out-of-state retailers who don’t collect and remit the tax. When you make an Internet purchase, the company that processes your credit card transaction would automatically calculate and charge sales tax using software developed by a company hired by the state. The state would recoup the cost of the contracts through the tax collections they yield, with specific costs being determined during the contracting process. In addition to recouping sales tax revenues, Florida will be able to license the unique software to other states, thereby creating a second stream of income. Once the resulting collections from Internet sales reach $5 billion, the state will reduce its sales tax rate by one penny. The state will still be $1 billion or more ahead in tax collections, despite the rollback. If you have any specific questions, please feel free to email me at at kevinambler dot com
“That’s almost a 20 percent sales tax reduction,” he said.
Mike, will Florida assess online sales tax at a flat statewide rate or will the various county rates apply?
In order for $5 billion in sales tax to be generated purchases would have to approach $100 billion annually. Is the $5 billion for online purchases only or for all purchases made by Florida residents?
How will residency be determined? Obviously Florida has many people in residence seasonally who are not legal residents of the state.
I don’t understand the significance of the one penny reduction, would you please explain why you feel this is a feature or incentive of this legislation? How do you intend to reimburse these funds? Will the funds be reimbursed by the state or the credit card company?
I assume that Florida will pay all costs to the credit card companies for this service and hope that neither the residents nor merchants will be liable for those fees. Please correct me if I’m wrong.
I like the idea of the state using the credit card companies as their agents to collect the taxes thereby removing the compliance, collection and disbursement burden from the merchants. It’s a very interesting solution to a problem that other states have addressed less rigorously.
Thanks for stopping by Mike.
I am actually quite intrigued by this legislation as it does seem a fairer way to manage the collection of the sales and use tax. It is easy to see that quite a bit of thought went into drafting this legislation. Also seems to reduce the burden on merchants.
I think this is definitely something that could also be considered as part of a Federal solution.
I will be following up with you, thank you very much for the offer.
Mike-
THANK YOU for posting your comment. It is rare for any state representative or their aides to ever comment on these issues.
I am sympathetic to the states and their financial woos. It is encouraging to see a state that is not attacking affiliates as a way to collect sales and use tax.
I am curious if HB 1443 solves the Federal issue already inherent in tax collection. Are credit card issues regulated by the state of Florida? If not, will you have any more luck getting them to implement your new software than you are having getting online retailers to collect the tax?
I wonder how Amazon feels about this new twist proposal. Will they fire their affiliates in Florida as they did in Colorado? If So then The state of Florida will not reach their projected goals and only increase the numbers of the unemployed!
For the general population of Florida (us poor folk), money is not being made, its only being moved. Take it from one place, and it will disappear from another. When property taxes and insurance prices started to rise, I stopped getting haircuts, going to a doctor, buying clothes online. I never eat out. My current doctor is the county coroner, when the time comes. Go ahead Florida, see how much tax money you will collect from the purchases I no longer make – neither brick and mortar nor Internet.