Florida Sales Tax Nexus: What Out-of-State Sellers Need to Know
Florida Sales Tax Nexus: Key Rules and Responsibilities for Out-of-State Sellers
If you're an out-of-state seller doing business with Florida customers, it's crucial to understand Florida's sales tax nexus laws. Since July 1, 2021, Florida has required remote sellers to collect and remit sales tax if they meet certain thresholds. Let's break down what this means for your business.
Understanding Sales Tax Nexus
In simple terms, "nexus" refers to the connection between your business and a state that justifies the state's authority to impose tax obligations on your business. Traditionally, this connection was based on physical presence—having an office, employees, or property in the state. However, the landscape changed with the U.S. Supreme Court's 2018 decision in South Dakota v. Wayfair, Inc., which allowed states to require sales tax collection from out-of-state sellers with significant economic activity in the state, even without a physical presence.
Florida's Economic Nexus Law
Florida adopted its economic nexus law on July 1, 2021. Under this law, out-of-state sellers must collect and remit Florida sales tax if, during the previous calendar year, they meet the following criteria:
- Sales Threshold: Over $100,000 in gross revenue from taxable sales delivered into Florida.
- Transaction Threshold: Florida does not impose a transaction threshold; meeting the sales threshold alone is sufficient.
It's important to note that sales made through marketplace facilitators (like Amazon or eBay) are excluded from this threshold for individual sellers. Marketplace facilitators are responsible for collecting and remitting the tax on these sales.
What Constitutes a Remote Sale?
A remote sale is the retail sale of tangible personal property ordered by mail, telephone, the internet, or other communication from a seller who receives the order outside Florida and causes the property to be transported into Florida. This includes online sales, drop shipments, and remote service offerings.
Why Compliance Matters
Failing to comply with Florida's sales tax nexus laws can lead to significant consequences, including:
- Back Taxes: Liability for sales tax on past sales that should have been collected.
- Penalties and Interest: Additional charges for late payment and non-compliance.
Audits: Increased risk of audits by the Florida Department of Revenue (FDOR).
Florida has various ways to detect non-compliance, such as through shipping records, federal data sharing, and audits of Florida customers. Once discovered, unregistered sellers may face multi-year audits and substantial back assessments.
Steps to Ensure Compliance
If you determine that your business has economic nexus in Florida, it's essential to take the following steps:
- Register with the Florida Department of Revenue: Use the Florida Business Tax Application (Form DR-1) to register for a sales tax permit.
- Collect Sales Tax: Begin collecting Florida sales tax on all taxable sales delivered into the state.
- File and Remit Tax: File sales tax returns (Form DR-15) and remit the collected tax to the FDOR. Returns are typically due monthly or quarterly, depending on your sales volume.
- Maintain Records: Keep detailed records of all sales, tax collected, and returns filed to support your compliance efforts.
Voluntary Disclosure Program
If you haven't registered and have past sales that should have been taxed, Florida offers a Voluntary Disclosure Program. This program allows businesses to come forward and register without facing penalties or interest for prior periods, provided they meet certain conditions.
Conclusion
Navigating sales tax nexus laws can be complex, especially for out-of-state sellers. However, understanding Florida's requirements and taking proactive steps to comply can help you avoid potential pitfalls and ensure your business operates smoothly. If you're uncertain about your nexus status or need assistance with registration and compliance, consider consulting with a tax professional.
For more information and resources, visit the Florida Department of Revenue's Out-of-State Businesses page.
If you're looking for expert assistance with your Florida sales tax obligations, Sela Tax & Accounting LLC is here to help. Our team of professionals can guide you through the complexities of sales tax compliance, ensuring your business remains compliant and focused on growth. Reach out to us today to learn more about our services.
