Gov. Rick Scott’s deal with online retail giant Amazon is breathing new life into an issue almost as old as the Internet.
Retailers say the company’s plan to open distribution centers in Florida could advance their perennial push for legislation requiring Internet merchants to collect sales tax and remit those dollars to the state.
The U.S. Senate last month overwhelmingly approved legislation that would allow states to demand that Internet shoppers pay the same sales tax as over-the-counter buyers.
Although the issue faces steep odds in a tax-wary U.S. House, Florida Retail Federation President Rick McAllister said he senses a mood swing in a battle that has raged for two decades.
“We have a better chance of getting something done than we ever had before,” said McAllister, whose bricks-and-mortar store members are hurt by Internet sales.
“If Amazon comes to Florida and starts collecting and paying tax, you know they’re going to want to see a system created here and across the nation where a competitor like eBay has to pay taxes, too,” he said.
The added sales tax dollars that would eventually flow into the state treasury from Amazon purchases also could prove a bounty for Scott and the Republican-led Legislature.
Democrats have said that such new revenue should bolster state spending on schools and social programs. Republican leaders, though, are certain to look to convert the money into tax breaks for corporations and consumers.
Amazon sales represent about $80 million annually in Florida tax revenue, retailers estimate.
Advocates say that once Amazon starts collecting tax and turning it in, lawmakers could use these added dollars to reduce the state’s corporate income tax, property taxes or levies on phones, satellite and cable television – a potentially popular move, especially in an election year.
Scott and Amazon announced the framework of an agreement earlier this month that they said would bring more than 3,000 jobs to the state by 2016. That’s likely when the sales tax collections would begin.
Under a 1992 U.S. Supreme Court ruling, retailers are not required to collect sales taxes in states where they have no physical presence, such as a store, office or warehouse – a so-called nexus.
As a result, stores like Wal-Mart, J. Crew and Old Navy – which have plenty of brick-and-mortar space in Florida – do collect and remit sales tax on online sales.
But such companies as Amazon, Bluefly, Inc., and Overstock.com don’t – and that’s who retailers have been targeting in Washington and Tallahassee.
Turning Amazon into an ally in that fight could help, advocates said.
“It’s too early to answer that question,” said Rep. Jared Moskowitz, D-Coral Springs, who sponsored legislation this spring that could have extended the sales tax to online sales.
“But I think it’s clear that we in government shouldn’t be in the business of picking winners and losers. Right now, the tax system works against stores,” he said.
Analysts have long tried to lure support for taxing Internet sales by portraying it as a means to modernize and broaden the state’s tax base.
Florida’s 6 percent statewide levy accounts for about three-fourths of the state’s general revenue. But with the shift toward the Internet and a service economy, sales tax is capturing a steadily smaller share of transactions.
Still, in the Florida Legislature, attempts to enact a broader Internet tax have gone nowhere.
Without congressional approval, a state law would be subject to lawsuits by online-only retailers – as they have been in the few states attempting such action.
Legislators voice sympathy with the struggles of Florida shopkeepers. But they are gun-shy when it comes to measures that opponents could cast as taxing products currently seen as tax-free.
Under current law, consumers are supposed to submit sales tax when they make online purchases. But if a retailer isn’t demanding it, hardly any buyer sends payments to state revenue officials.
“There just isn’t an appetite for us to try to tax Internet sales on our own,” said Rep. Mike Fasano, R-New Port Richey, who has heard the debate course through his 19 years in the House and Senate.
“I support the concept, because it makes sense and you’re supposed to be paying this tax anyway,” Fasano said. “But I don’t see any movement in the Legislature in this direction unless Congress acts.”
McAllister, though, said retailers would like to see state lawmakers in next year’s session approve legislation that would ready the state for collecting the sales tax, if Congress approves.
The Amazon agreement is still unfolding. But the company plans to spend more than $300 million on new distribution warehouses in Florida, and that is sparking a free-for-all among local governments looking to woo the Fortune 500 company and its jobs.
Palm Beach County is making a play, and Hillsborough County has already lined up an incentive package it hopes will attract 1,000 jobs. Scott also said the state is ready to push financial sweeteners toward the company.
Once Amazon establishes a footprint in Florida, it will be subject to collecting and remitting state sales tax.
A study prepared in 2011 for the Florida Retail Federation concluded that as much as $454 million a year in state sales tax revenue is lost through untaxed, online purchases.
Meanwhile, online sales continue to grind away at storefront retailers, industry officials say.
“Amazon.com and these other online-only sellers never put Little League jerseys on the backs of kids,” McAllister said. “They’ve never really given back to the communities where they make their sales.”