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Florida Amazon Sales Tax: The Good and the Bad

On May 1, Amazon.com began charging sales tax on online purchases made in the state of Florida, adding it to their list of 20 other states already paying the tax as well.

In 2013, total e-commerce sales were estimated at $263.3 billion in the U.S. – a 16.9 percent increase from 2012. Of more than 3,000 online shoppers surveyed, 70 percent stated that they preferred to shop their favorite retailer online, according to the Unites Parcel Service. Needless to say, the ease of purchasing items with just a click of a mouse has us hooked.

On May 1, Amazon.com began charging sales tax on online purchases made in the state of Florida, adding it to their list of 20 other states already paying the tax as well. The Internet giant will be opening two distribution centers later this year in Hillborough and Polk counties, and since the Florida Department of Revenue requires online company companies to begin collecting sales taxes once a company has a physical presence in the state, Florida residents will see a 6 percent sales tax slapped on to their Amazon purchases from here on out.

So what does this mean for Florida online consumers? Well, you just have to take the good with the bad.

 

The Good

John Kancilia, attorney with Gray Robinson, says that the purpose of collecting tax (aside from increasing tax revenues) from online retailers is to put those retailers on the same taxing plane as businesses that operate within the state. The collection of sales tax from online sales will increase sales tax revenues, and the Florida Retail Federation estimates that the state will collect $80 million annually from Amazon sales in Florida.

The added tax may also drive residents to purchase locally from businesses in the area, rather than online, driving revenue to those markets. However, Kancilia says “without a crystal ball, it’s hard to tell what the extent of the effects will be.”

 

The Bad

This is quite obvious to anyone: consumers will have to pay the tax on their Amazon purchases. A poll in a Miami Herald article indicated that 67 percent of those polled would alter their buying habits as a result of the sales tax on online sales. This may mean that consumers will seek an online retailer who is not required to collect the tax. In a paper published by researchers at Ohio State University, it states that sales dropped in states where Amazon added the charge.

It’s too early too tell what implications may arise from this new tax, but it looks as though some Florida consumers may be on the hunt for another online shopping alternative.

 

By Jenna Arend

 

About the author

i4 Business

i4 Business

I4 Business magazine has become one of the most trusted voices for and about the Central Florida business community. Each month through our print and digital platforms, we provide access to meet, to learn from and to learn about some of the incredible entrepreneurs and business leaders, along with economic trends that are shaping our region.

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