Wednesday, January 27, 2021

Florida's little-known honor system for online sales tax could be costing the state millions

Posted By on Wed, Jan 27, 2021 at 8:07 PM

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Were you aware that when you buy something online — say, Sarah Jaffe's latest at or a bag of Rancho Gordo cranberry beans — if you aren’t charged sales tax, you’re supposed to download Form DR-15MO from the Florida Department of Revenue, calculate what the local sales tax would be, and send in a payment?

It works on the honor system. And it’s a little-known and rarely enforced rule that could be costing the state millions of dollars.

The Legislature has taken up a proposal that would require online retailers to take on the task, rather than leave it to uninformed and, let’s face it, unmotivated consumers.

Sen. Joe Gruters says his proposal, SB 50, requires businesses with no physical presence in Florida to collect sales tax when customers in Florida make purchases, and it could pump more than $600 million a year into coronavirus-injured state and local coffers. While the pandemic has led to more shopping online, the state faces a projected $2.75 billion revenue shortfall.

The Florida Center for Fiscal and Economic Policy points out that restoring the corporate income tax to its pre-2018 rate — and doing a better job of collecting it — would be a way to raise revenue without putting the onus on families and individuals, but that’s likely a non-starter with our Legislature’s business-friendly majority. Florida has one of the lowest corporate tax rates in the nation, and according to a deep dive by the Orlando Sentinel in 2019, 99 percent of corporations pay no taxes in Florida at all.

Last year, Gruters made the same proposal, but it didn't even get through committee. But this year, with government pockets much lighter than projected, its prospects look much brighter. 

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