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Sales Tax 101

Florida and Missouri Consider New Sales Tax Laws

by Jennifer Dunn

When the Supreme Court of the United States handed down their decision in South Dakota v. Wayfair back in 2018, many states were more than ready for the increased powers this gave them to require merchants to collect sales tax. 

In fact, many state already had economic nexus laws (which require more out of-state-sellers to collect sales tax) and marketplace facilitator laws (which require large online marketplaces like Amazon to collect on behalf of their 3rd party sellers) on their books even before SCOTUS handed the Wayfair ruling down. 

Sensing which way the wind was blowing, these states were lying in wait, ready and eager to collect more sales tax revenue.

And then there were Florida and Missouri. 

What’s different about Florida and Missouri sales tax?

Unlike every other US state with a sales tax, Florida and Missouri have not yet taken advantage of the expanded freedoms the South Dakota v. Wayfair ruling gives states when it comes to requiring merchants to collect sales tax. 

As of right now, these two states remain the outliers who have not passed either a marketplace facilitator law or an economic nexus law.

That means that Florida and Missouri both still operate like we are living in pre-Wayfair times. 

What does that mean for eCommerce businesses?

Marketplace Facilitator Laws

The big online marketplaces only collect on sellers’ behalf where they are legally required to do so. The lack of marketplace facilitator laws means that third-party sellers who sell on the big marketplaces like Amazon, eBay, Etsy and Walmart are still required to collect sales tax from buyers if they have nexus in Florida or Missouri. 

And further, most higher-volume Amazon sellers will likely have nexus in either or both of those states, because Florida and Missouri are both home to at least one Amazon fulfillment center, and storing inventory in an Amazon fulfillment center creates sales tax nexus

Economic Nexus Laws

On a brighter note, Florida and Missouri have also elected, so far, not to pass economic nexus laws. 

In other states, economic laws require that any online business whose sales surpass a certain threshold over the course of a year are required to collect sales tax from buyers in the state. That’s even if that eCommerce business has no other sales tax nexus in the state.

For example, a business who makes more than $100,000 in sales in more than 200 separate transactions in Georgia, Florida’s neighboring state, is required to collect sales tax from all Georgia buyers.

But so far Florida and Missouri are the only two states in the nation (that have a sales tax) that haven’t elected to pass economic nexus laws yet.

What’s new with Florida, Missouri and sales tax?

But the sales tax tides may be about to turn. While both Florida and Missouri have flirted with passing new sales tax legislation in the past years since Wayfair became the law of the land, neither has yet succeeded. That hasn’t deterred lawmakers from trying, though, and here’s what’s happening in 2021.

Florida Sales Tax in 2021

If passed, Florida’s S.B. 50 would require two things:

  • marketplaces like Amazon and eBay would be required to collect sales tax on behalf of third party sellers who use their platforms
  • remote businesses who gross more than $100,000 in sales in the previous calendar year would be required to begin collecting Florida sales tax from buyers

This would bring Florida more in line with other states, who also already have both requirements.  

If it passes, the law will go into effect later this year.

Missouri Sales Tax in 2021

Like with Florida’s bill, Missouri’s S.B. 97 would establish that marketplaces are required to collect on behalf of 3rd party sellers and that any remote business who grosses more than $100,000 in sales in the previous twelve months must begin collecting Missouri sales tax from buyers. 

Interestingly, this law would also actually lower Missouri’s sales tax rate starting in 2023.  

If it passes, the law will go into effect on January 1, 2022.

What’s the future of sales tax in Florida and Missouri?

Right now, this is unknown. Both state’s legislatures are in session, and we will be watching closely to see if either of these sales tax bills show signs of movement. 

With the economic downturn caused by the pandemic, it seems likely that states will be looking for creative ways to record revenue, and taxing remote sellers may start to look more attractive to lawmakers in both states.

Stay tuned here at the TaxJar blog for updates on Florida and Missouri sales tax laws as they come in.

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