How Will the Supreme Court’s Internet Sales Tax Ruling Affect Florida?
On June 21st, 2018, the Supreme Court of the United States released a long-awaited opinion in the case of South Dakota v. Wayfair, Inc.. In a decision that broke through standard ideological lines, the court ruled that U.S. states have the right to charge a sales tax on internet purchases. This ruling overturned a previous decision that allowed states to collect an internet sales tax at the point of sale only when the selling company had an actual presence within the state where the buyer was located.
This decision is a significant change. It could have major implications for some business. What happens next in Florida will depend on the decisions made by policy makers in the legislature and authorities at the state’s Department of Revenue. In this article, the top-rated Miami business law attorneys at Pike & Lustig explain what South Dakota v. Wayfair means for businesses in South Florida.
Understanding the Status of the Law Prior to South Dakota v. Wayfair
Before the Supreme Court made its recent decision, the state of internet-based sales taxes was somewhat confusing. Essentially, states did not have the ability to force internet-based retailers and online businesses to collect sales taxes at the point of purchase unless that specific business also had a physical presence within the same state.
For example, if a Florida consumer made a purchase at a Walmart location in Palm Beach County, that purchase would be subject to our state’s sales tax. Similarly, if the same customer made a purchase from Walmart’s website, Florida sales would be applied. This is because Walmart has locations within the state of Florida. However, if the consumer made an online purchase from a retailer that only has physical locations in California, there might not be sales tax collected at the point of sale. In that case, Florida sales tax would only be charged it the business voluntarily chose to collect the tax.
Post South Dakota v. Wayfair: What Happens Now?
For the time being, it is unclear what will happen in Florida. The state that brought this case was South Dakota. In 2017, that state passed a law requiring all online retailers that made at least $100,000 worth of sales per year to collect state sales tax in any circumstance in which a South Dakota customer made a purchase, regardless of the location of the seller.
However, Wayfair, the large home goods seller, decided not to comply. Instead, the company challenged the legality of the law. In the end, the Supreme Court ruled against Wayfair, determining that South Dakota has the authority to tax these transactions.
At this point, our state has no law on the books that is similar to the new South Dakota law. As such, it is not certain that the Florida Department of Revenue can require out-of-state businesses to charge state sales taxes at the point of sale. The Florida legislature may need to change state law before state sales tax will be applied to all internet transactions.
Speak to a Florida Business Law Attorney
At Pike & Lustig, LLP, our skilled business litigation lawyers always stay up to date on the latest developments that impact companies in South Florida. If you need business law guidance, please do not hesitate to contact us today at 561-291-8298 (West Palm Beach) or 305-985-5281 to get a fully confidential consultation.