U.S. Supreme Court OKs internet sales tax collection
The recent U.S. Supreme Court decision in an internet sales tax case, South Dakota v. Wayfair, could add hundreds of millions of dollars a year, or more, to Florida’s coffers.
It’s also vindication for former state Rep. Michelle Rehwinkel Vasilinda, a Leon County Democrat-turned-Republican running for mayor of Tallahassee.
“This was an issue of fairness, an issue of the rule of law and issue of clarity,” she said. “There was a lot of money left on the cutting room floor in internet sales taxes we could have collected.”
Rehwinkel Vasilinda said a study she commissioned put the value of lost Department of Revenue collections at more than $2 billion. Despite that potential windfall, Rehwinkel Vasilinda said House Republicans balked at enacting what some considered an additional tax and that’s why the bill failed to get past committees in most cases.
But the Supreme Court’s 5-4 ruling in Wayfair that confirms a state’s authority to collect sales tax on internet purchases rights a wrong, said Fort Myers attorney Mark Nieds — and it’s not an additional tax.
“For small businesses, this can really level the playing field,” he said, echoing the position of several Florida business groups, including Florida TaxWatch and the Florida Retail Federation.
Before Wayfair, said Nieds, a state could not require an out-of-state or online retailer to collect sales tax from its customers if that retailer did not have a physical presence within the state. That dates back to mail-order sales, before Amazon sold its first book.
More recently, in 2016 when Amazon opened warehouses and distribution centers in Florida, the online retailer for the first time agreed to collect sales tax from customers in Florida because of its presence, or nexus, in the state.
“Since online retailers without a physical presence in a state were not required to collect sales taxes, this led to trillions of dollars in online sales transactions going basically tax free,” Nieds wrote in a blog post.
South Dakota, to secure some of those revenues, enacted a law in 2017 that taxes internet sales by online retailers with at least $100,000 in annual sales or 200 individual transactions.
But Wayfair, which reported $4.7 billion in revenue in 2017, didn’t comply with the law. That led to the lawsuit that ultimately made it to the U.S. Supreme Court.
Florida currently has no law that provides a clear procedure to tax online retailers. Nieds says it’s possible the Florida Department of Revenue could begin collecting the tax without a law.