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Internet sales tax ruling could have major impact on Florida

From The News Service of Florida:

A U.S. Supreme Court decision expanding the ability of states to collect sales taxes from online purchases could have a significant impact in Florida.

In a 5-4 decision, the court on Thursday upheld a South Dakota law that allows that state to apply its sales tax to major online retailers, even if they had no physical presence in the state. The decision reversed a 1992 court decision that held that online retailers could only be required to collect and remit sales taxes if they had stores or some other "nexus" in states.

"(The prior decision) puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers," Justice Anthony Kennedy wrote for the majority. "Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own."

Brick-and-mortar retailers in Florida and other states have long complained that allowing some online retailers to evade sales taxes creates a competitive advantage for remote sellers. Consumers were supposed to voluntarily pay sales taxes on remote purchases, although it rarely took place.

READ MORE: Taxing online products and services challenges lawmakers

The Florida Retail Federation, which has long tried without success to get the Legislature to address the issue, hailed Thursday's decision.

"For years, online-only retailers have exploited this loophole that allows them not to collect sales tax, which has given them an unfair competitive advantage over brick-and-mortar stores," said James Miller, a spokesman for retailers. "This decision finally levels that playing field, , and I think that's all any business wants."

Dominic Calabro, president of Florida TaxWatch, a business-oriented advocacy group, cited Florida's heavy reliance on the statewide 6 percent sales tax as a major source of operating revenue for state services.

"You've got to have a modern sales tax, so we don't have to have any other kind of tax that people don't want," Calabro said. "So, by relying on a sales tax, you have to make sure it's modern and up to date."

The federal Government Accountability Office estimated last november that states could have collected between $8.5 billion and $13.4 billion in sales taxes in 2017 if they had expanded taxing authority.

In testimony before the Legislature's House Ways and Means Committee in 2017, analysts gave a rough estimate of $200 million in potential annual new sales tax revenue from applying the sales tax to more remote sales.