How to Determine When to Apply Sales Tax to Your Online Business
As all Florida business owners and consumers know, any goods sold/bought in the state of Florida are subject to a sales tax. This tax may or may not apply to goods sold or purchased through ecommerce (i.e internet sales). For a business owner, it is important to know when this sales tax applies to goods sold online to remain in compliance with state tax regulations. This article will provide some insight as to when a consumer should be subject to sales tax when purchasing goods online as well as shipping goods to customers in Florida.
One circumstance where Florida sales tax would apply to internet sales is if the business in question has a “physical presence” in Florida — i.e a businesses with a store, warehouse, office or sales representative in the state. In this case, the business is required to apply the appropriate sales tax to the purchase if shipping to a customer in Florida. If the business has a physical presence in Florida but is shipping to a customer in New York, for instance, Florida sales tax would not apply. The correlating rule for this circumstance is assumed to be that if the business does not have a physical presence in the state, they are not required to collect sales tax for an internet purchase from a customer in that state. For a business outside of Florida that maintains a significant volume of inventory within the state, this rule would not apply. If the business is considered to have nexus with the state– meaning that the business has a significant presence in the state—then the business is required to collect sales taxes for internet purchases shipped to Florida.
Exemptions For Internet Sales Tax
From a merchandise standpoint, there are certain goods that are exempt from Florida sales tax when sold to customers within the state. For instance, software purchased for research and development is exempt from sales tax. Additional exemptions to internet sales also include cosmetics (i.e any items applied to the human body for cleansing or aesthetic enhancement) and certain farm equipment. While some items may be understood to be exempt from sales tax, there are certain circumstances—such as intended use of said items or subcategories within that item—that would otherwise require the customer to pay sales tax if purchased.
Remember To Keep In Compliance With The IRS
It is recommended that any business owner involved in ecommerce visit their local attorney or CPA to better understand these exemptions, as well as any changes in Florida sales tax laws. The limitations surrounding sales tax for internet sales are a topic of constant debate, so it is best to remain up to date with any recent changes in sales tax laws in order to remain in compliance with state tax laws. It is important to be in compliance with the Florida Department of Revenue and the IRS to avoid any financial problems or criminal prosecution. If you have any further questions regarding your online business, internet sales tax and the Florida sales tax, contact Acosta Tax & Advisory, PA at 954-239-8365 to set up a free consultation with our CPA or in-house tax attorney.
* This is not direct legal or tax advice – contact your accountant to discuss your personal situation