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All About Sales Tax

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Sales tax is one of the most interesting, and challenging, taxes. It’s interesting because it involves clients in every possible industry. Every active business has potential sales tax exposure, no exceptions!  And unfortunately sales tax compliance is particularly difficult for two, specific reasons.  First, the tax is perhaps the most fact-dependent – seemingly inconsequential changes in the underlying facts can transform a nontaxable sale into a taxable one.  Second, these rules are constantly changing.  It’s tough enough to keep up with these changes in just one state.  But many vendors, especially those selling over the internet, have to keep abreast of these changes in multiple states.  So it’s easy to fall behind on sales tax compliance. 

With this blog, we hope to keep you up to date on impactful changes in the sales tax compliance, especially in New York State.  We’ll review legislative and administrative changes in the sales tax; we’ll discuss new sales tax case law; and we’ll highlight the enforcement initiatives and tactics we’re seeing while defending businesses in sales tax audits.  We hope you find this content as interesting as we do.  Please contact us with any questions. 

Florida Finally Enacts Sales Tax Economic Nexus Legislation

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After several years of failed bills, Florida has finally joined the other 43 states that have passed economic nexus threshold for sales and use tax purposes in the wake of the U.S. Supreme Court’s decision in South Dakota v. Wayfair Inc. On April 19, 2021, Governor Ron DeSantis signed S.B.50 that enacted legislation imposing a sales tax collection requirement on both remote sellers and marketplace providers.

Under Florida’s new law, every person with a substantial number of remote sales into the state is considered a “dealer” and required to collect and remit sales tax. A “substantial number of remote sales” is defined as any number of taxable remote sales in the previous calendar year where the sum of the sales price exceeds $100,000.  “Remote sales” only includes retail sales of tangible personal property delivered into the state. So unlike some other states, nontaxable sales and sales of services are not included with total sales to determine whether the threshold has been exceeded.

The same thresholds apply to marketplace providers and marketplace sellers. The marketplace seller should not include sales made through the marketplace facilitator in determining whether it has exceeded the $100,000 threshold.  The marketplace seller must also exclude sales made through a marketplace facilitation on its tax return. Marketplace providers must certify to the marketplace sellers that it will collect sales tax on its behalf.

The law goes into effect on July 1, 2021, so if one’s sum of taxable sales during 2020 exceeded $100,000, then the dealer is required to register and begin collecting Florida sales tax on taxable sales made into Florida on or after July 1, 2021. There is also a safe harbor provision that relieves a dealer of any tax, interest and penalty due on sales prior to July 1, 2021 if it registers with the Department of Revenue before October 1, 2021. This does not apply if the dealer is under audit; is under an administrative or judicial proceeding as of July 1, 2021; or has been issued a bill, notice, or demand for payment. 

At this point, the only other state that imposes a state sales tax that does not have an economic nexus provision is Missouri, so it is only a matter of time until all states impose some kind economic nexus for sales and use tax purposes. That said, each state’s threshold is slightly different so it is vital to understand the thresholds in all 44 states.

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