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Amazon To Begin Collecting Sales Tax In California, When Will Florida Get Its Due?

Beginning this Saturday, September 15, 2012, online retailer will begin collecting sales tax for orders made in the State of California.  This will mark an end to a long fight between the internet sales giant and one of the largest states in the union.

For years, Amazon relied on the 1992 U.S. Supreme Court decision of Quill Corp. v. North Dakota to justify not collecting and paying state sales tax.  In that case, the Quill Corporation sold office equipment and supplies by soliciting business through catalogs and flyers, advertisements in national periodicals, and telephone calls.  Its annual national sales exceed $200 million of which almost $1 million were made to 3,000 customers in North Dakota.  North Dakota attempted to change its laws in order to hold Quill responsible for collecting state use tax even though Quill did not have a physical presence in the state.  The Supreme Court rejected this attempt and Amazon’s legal argument was born.  Of course, 1992 was well before the explosion of online retailing and Amazon’s 2011 revenue of $48 billion far dwarfed that earned by Quill.  Thus, the states began to take sterner notice.

Perhaps seeing the writing on the wall, Amazon has begun to reach arrangements with several states to bring distribution centers to those states in exchange for a period of tax-free sales, followed by the collection of state sales tax.  This is what happened in California.  States that will follow include Nevada (2014), Indiana (2014), Tennessee (2014), Virginia (2013), New Jersey (2013), and South Carolina (2016).

So what about Florida?  Earlier this year Amazon attempted to make a deal with the Sunshine State, offering to spend up to $200 million to build distribution centers in Florida in exchange for the state allowing Amazon to wait two years before collecting sales tax.  Amazon said that the distribution centers would bring up to 3,000 new jobs but the proposal was met with stiff resistance from Florida business groups.  Nothing appears to have come from the discussions as of this point and Amazon still does not collect Florida sales tax.

None of this means that Florida residents are off the hook when it comes to paying taxes on their purchases from Amazon.  Florida, like most states, imposes a use tax on items purchased outside of Florida, including purchases made in another country, which are brought or delivered into the state and would have been taxed if purchased in Florida.  The use tax rate is the same as the sales tax rate, 6%.  According to the Florida Department of Revenue, if an out-of-state seller fails to collect sales tax, it is the taxpayer’s responsibility to submit payment directly to the DOR.  There is an exception for items purchased and used in another state, territory of the United States, or the District of Columbia for 6 months or longer before bringing them into Florida, however, items purchased and used in another country do not qualify for this exception.  There is also a credit for the amount of sales tax charged by the seller, up to 6%, but only for sales tax imposed by a U.S. jurisdiction.  The tax is due on the first day of the month following the quarter in which purchases are made and is late after the 20th.

Florida use tax returns can be filed and paid online, or a Form DR-15MO may be downloaded and mailed to the DOR.