Supreme Court Sales Tax Decision
The Florida Supreme Court has handed down a decision that will have major implications on Florida businesses who operate online. The case involves a flower company in Palm Springs that argued that it didn’t have to pay sales tax because the major operations of the business were all done out of state. The Supreme Court disagreed.
It was a unanimous ruling by the state Supreme Court. The decision overturns a 2014 decision by the 4th District Court of Appeal. The court’s decision rests on an interpretation of what’s called the dormant commerce clause of the U.S. Constitution. Put simply, a state is not allowed to unduly burden interstate commerce by passing laws.
American Business USA, the defendants in the case, says that their website 1vende.com does not involve anyone in Florida, and that the only interaction the business has with Florida is that it registered the business name there and operated the website from a location in Wellington. All orders, flower vendors, delivery drivers, and recipients were out of state. Since the sale was completed out of state, so they argued, Florida did not have a right to claim sales tax. The 4th District Court of Appeal agreed, saying that charging sales taxes on out-of-state goods and services “impermissibly burdened interstate commerce.”
However, in the decision passed down, it is precisely because American Business has a physical location in Florida and accepts the orders through the web server hosted there that they owe taxes. Quoting from the decision:
“It benefits from the public safety agencies of the state, as well as other infrastructure and public amenities paid for by state taxes. It benefits from the orderly, civilized society that is afforded it by the state of Florida. American Business has by its presence and transactions in Florida availed itself of the opportunities and protections made possible in part by the taxes imposed on its sales transactions. Thus, there is a reasonable relationship between the company’s presence and activities in the state and the tax at issue.”
It is unknown whether American Business USA will try to appeal to the U.S. Supreme Court.
If you operate a website in Florida that sells products out-of-state and you currently do not pay sales tax, you may be at great risk now. You may have to pay your share of sales tax. Speak with a tax attorney like the professionals at Zuckerman Law to see if you may need to make amends with the Florida DOR.
Zuckerman Law have been serving the residents of Ft. Lauderdale and Miami for over 30 years. We know how to negotiate with the Florida DOR and what your obligations are as a Florida business owner. If you need to discuss your tax situation, call us or use our contact form. Let us relieve your tax worries.