Senate Takes Steps to Modernize Online Sales Taxes
The Senate Commerce and Tourism Committee today took the first step in leveling the playing field between brick and mortar businesses and online retailers by passing SB 1112. Under this bill, online businesses that conduct 200 or more transactions or sales of over $100,000 in Florida will be required to register with the Florida Department of Revenue (DOR) and collect and remit sales tax. Alternatively, the bill allows for marketplace providers, like Ebay or Amazon, to collect and remit the sales tax. With the increased revenue and in order to be revenue neutral, the bill proposes reducing the Florida-only Business Rent Tax by 1.5 percent and includes a sales tax holiday for hurricane supplies.
In June 2018, the U.S. Supreme Court issued an opinion in South Dakota v. Wayfair which paved the way for states to begin collecting the sales tax on internet purchases if a company has a significant economic presence in the state. Over 40 states have adopted rules or passed legislation to implement the Wayfair decision and set minimum requirements to establish an economic presence. In Florida, this is a tax that has always been due, but the burden has been on the taxpayer to submit the tax to the DOR for online purchases.
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New Report Highlights Federal Tax Reform Impacts on Florida
The Florida Department of Revenue (DOR) recently released an examination of the federal Tax Cuts and Jobs Act of 2017’s (TCJA) impact in Florida – a nearly year-long review that was directed by the Florida Legislature. Like many other states, Florida uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. Because of the many changes contained within the TCJA, it is estimated that a full adoption, or “piggyback” of these changes, would increase Florida’s tax base by 13 percent.
DOR identified 14 topics that will have a significant impact on Florida’s corporate income tax. These topics are the same that have been identified in previous status reports and have been brought to DOR through public testimony, including:
- Like-kind exchanges,
- Global Intangible Low-Tax Income (GILTI) and
- Net interest deductions.
The final report includes a full analysis of each topic, including an analysis on the impact to state revenue. The Florida Chamber offered comment in a written letter to the Department of Revenue encouraging Florida to decouple from the GILTI and net interest deduction changes in the TCJA. We will continue to be engaged as the Florida Legislature uses the information from this report to implement federal tax reform changes for state corporate income tax purposes.
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Share this important message with your company’s CFO to help ensure they have the latest information on this important issue. For more details, contact Carolyn Johnson at firstname.lastname@example.org or at 850-521-1235 to get involved in our efforts to ensure Florida’s tax climate remains competitive.
Florida Department of Revenue Issues Status Report on Federal Tax Reform
Since the end of the 2018 Legislative Session, the Florida Department of Revenue (DOR) has been busy examining the impact of the federal Tax Cuts and Jobs Act of 2017 (TCJA) on Florida. Florida, like many other states, uses federal taxable income as a starting point to determine Florida income for the purposes of corporate income tax. Because of the many changes contained within the TCJA, it is estimated that a full adoption, or “piggyback” of these changes, would increase Florida’s tax base by 13 percent.
DOR has hosted two public meetings to hear from businesses and other stakeholders on how components of the TCJA will impact Florida taxes. Additionally, DOR is soliciting public comment by email until December 14, 2018 at CITReview@floridarevenue.com. The department issued its second and final status report before submitting their report to the legislature by February 1, 2019.
DOR has identified 14 topics for further investigation and review, including:
- Global Intangible Low-Tax Income (GILTI);
- Bonus Depreciation;
- Amortization of Research and Experimental Expenditures;
- Net Interest Deduction;
- Changes to the Treatment of Capital Contributions; and
- Like-kind Exchanges.
The Florida Chamber has also offered comment in a written letter to the Department of Revenue, encouraging Florida to decouple from the GILTI and net interest deduction changes in the TCJA.
How Florida adopts the changes under the Tax Cuts and Jobs Act will be a significant discussion during the 2019 Legislative Session. For more information or to provide feedback on how the Tax Cuts and Jobs Act impacts your business, please contact Carolyn Johnson at email@example.com or 850-521-1235.
New Proposed Rule on Florida R&D Tax Credit
Yesterday, the Florida Department of Revenue announced proposed changes to the rule implementing the Florida R&D Tax Credit. If written notice is received, a rulemaking workshop will be held on November 22, 2016. The proposed changes to the rule include the following:
- Addresses the process if the Florida Department of Economic Opportunity (DEO) denies to certify a company as being in a targeted industry and the company protests.
- Removes the requirement that the Florida Department of Revenue (DOR) notify companies of their allocation within 10-working days.
- Specifies that if DOR audits the company and finds the R&D credits were overstated on the application, the Department will proportionately reduce the credit allowed. If DOR audits the company and finds the R&D credits were understated on the application, the company receives no additional credit (due to the capped allocation).
- Specifies that the credits are not transferrable unless the whole business is sold in a single transaction.
CLICK HERE to find additional information on these proposed changes and the rulemaking notice.
In 2015, the Florida Chamber of Commerce was instrumental in working with the Florida Legislature to improve the R&D Tax Credit program. Prior to these changes, companies applied on a first-come, first-serve basis and the cap on tax credits was met in minutes. Now, companies have a week-long period to apply, and if the cap is exceeded, each qualified company receives a pro-rated portion of their eligible tax credits.
The Florida Chamber also fought to increase the cap the last two years, and was successful in an increase to $23 million in available credits for the 2015 tax year. 118 applications were approved for 2015, compared to 23 applications the prior year. Each company received approximately half of the amount requested. The cap is $9 million for the 2016 tax year.
We will continue to fight to increase available credits to companies performing R&D in our state. To join us, please contact Carolyn Johnson.
New Year, New Reemployment Tax Rates
Florida job creators will see additional savings this year, effective January 1, on their 2016 reemployment tax, also known as the state unemployment compensation tax. The minimum tax rate will go down from $16.80 per employee to $7 per employee, and the maximum rate remains the same at $378 per employee. Notices of reemployment rates will be distributed to each employer by the Florida Department of Revenue.
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For more information on the reemployment assistance tax and to receive a copy of the 2016 Reemployment Tax Rates Fact Sheet, please contact Carolyn Johnson at firstname.lastname@example.org or 850-521-1235.
Florida Chamber Encourages Shoppers to Save Money This Weekend
Beginning this Friday, August 1 and lasting through Sunday, August 3, many Florida residents will take advantage of our state’s annual “Back-to-School” sales tax holiday. The Florida Chamber of Commerce encourages shoppers to take advantage of this opportunity to purchase select items tax free.
“During this sales-tax holiday families will be able to save money on school supplies and other back-to-school items that will set students up for success in the upcoming school year,” said Governor Scott in a statement. “We are proud to offer this sales-tax holiday as it will result in direct savings for Florida families as they prepare for the school year.”
According to the Florida Department of Revenue, no Florida sales tax or local option tax will be collected on:
- Sales of clothing, footwear, and certain accessories selling for $100 or less per item,
- Certain school supplies selling for $15 or less per item, or
- The first $750 of the sales price for computers and certain computer-related accessories when purchased for noncommercial home or personal use.
Considering Florida’s general sales tax rate is six percent, shoppers can expect to save at least that percentage, and potentially more considering local-option taxes, on all applicable items.
“The sales tax-free holiday is an excellent opportunity for families to stock up on the supplies their children need for the coming school year,” said Commissioner of Education Pam Stewart. “I appreciate Governor Scott’s dedication to ensuring families have this much-deserved break.”
Florida’s tax free shopping weekend is an ideal reminder of the Florida Chamber’s fight for e-fairness and the need to protect Florida businesses by closing the Internet sales tax loophole that lets government pick winners and losers.
During the 2014 Florida Legislative Session the Florida Chamber of Commerce proposed closing the Internet sales tax loophole in exchange for lowering other state taxes, such as the communication services tax that is charged to every cell phone bill in Florida. Unfortunately, our efforts were unsuccessful. Last year, renowned economists Art Laffer and Donna Arduin conducted a study showing that closing the online sales tax loophole could lead to more than 107,000 new jobs in Florida and 1.5 million new jobs nationwide in the next decade.
At the Florida Chamber, we will continue to work for tax cuts that put more money back into the pockets of Florida’s families.