Fri October 25, 2013
New Amazon Centers Will Add Sales Tax To Florida Purchases
The confirmation by Amazon.com that it will build a pair of massive "fulfillment" centers along the Interstate 4 corridor means that sometime in the next two years Floridians will have to start paying sales taxes on purchases from the online retail giant.
But even with Amazon eventually joining other businesses located in Florida in collecting the state's sales tax, some groups will continue pushing to eliminate an exemption that has allowed out-of-state online retailers including eBay and Overstock to avoid the tax.
The Florida Retail Federation, which has long called for ending the exemption, estimates that between $80 million to $90 million a year in sales taxes will be paid once Amazon starts collecting. Amazon announced this week that it would build distribution centers --- or what it calls "fulfillment" centers --- in Lakeland and Ruskin.
The Department of Revenue requires online companies to begin collecting sales taxes once "a company has a physical presence in the state," said Renee Watters, a department spokeswoman. That has allowed many out-of-state online retailers, including Amazon, to avoid adding the taxes to online purchases. Floridians are supposed to pay the taxes themselves when they buy from online retailers, but few do.
It remains unclear when the tax will be included on the Amazon website.
That could be when dirt is first turned on either of the distribution centers that Amazon announced this week, or when the first package is ready to roll out the doors of either location.
"It is a very fact-based situation and it depends on the facts of each individual circumstance," Watters said.
Asked about when construction of the new centers could begin or when the first packages will be shipped, Amazon spokeswoman Kelly Cheeseman instead replied in an email that the Seattle-based company was "excited" to bring full-time jobs to Florida and that when hiring begins jobs will be posted online.
The distribution facilities in Lakeland and Ruskin are part of a growing competition among businesses to shorten delivery time, which could be an indication that Amazon will want to quickly get the centers up and operational.
The company already has the support of each local community, which should help speed the permit approval process. Hillsborough and Polk counties approved incentives packages to help attract Amazon.
Amazon's entry into Florida's brick-and-mortar retail landscape won't end efforts by some business groups to get Florida to impose what they call "e-Fairness" tax laws and Congress to approve the Marketplace Fairness Act. The federal act would give states the authority to require online and catalog retailers --- regardless of where they are --- to collect sales taxes at the time of transaction.
"Amazon really hasn't changed the legislative situation at all," said John Fleming, a spokesman for the Florida Retail Federation. "There is still a loophole in Florida law, there is still a loophole in federal law as far as we're concerned. We're still going to need legislation to close this loophole."
The Florida Chamber of Commerce agrees.
"The day that Amazon comes on line they will begin paying sales tax and that will greatly contribute to a fairness between main street and online retailers, but that does not do away with the argument because unfairness will remain until lawmakers take a look at how to address that," said chamber spokeswoman Edie Ousley.
Lawmakers for years have looked at online sales as a possible source of tax revenue. Eight bills on the issue died during the 2013 state legislative session, including one (SB 316) that would have offset the additional revenue collected by lowering other taxes.
The proposal was strongly supported by Florida retailers that rely on non-Internet sales and have claimed for years they're at a disadvantage because buyers can purchase items online without paying sales taxes.
The hurdle has been the reluctance of state lawmakers to impose new taxes, a barrier that could be greater next year when many will be up for re-election.
And the disparity between online and brick-and-mortar retailers, even with Amazon joining the side of companies collecting sales taxes in Florida, is only expected to widen, Fleming said.
Online sales are growing. They are estimated by the retail federation to account for about 5 percent of all sales in Florida, of which Amazon is about 10 percent.
"It's a huge market and those are conservative numbers," Fleming said.
When the governor's office announced in June that Amazon intended to expand into Florida, the news release said Amazon would begin collecting Florida sales taxes "at such time as it is required under current Florida law."
The June announcement came a month after the deal was considered scuttled as the two sides were unable to reach an agreement on when Amazon would have to start collecting the taxes. Reports at the time noted that Amazon was seeking a two-year exemption from collecting state sales taxes.
The Lakeland facility will concentrate on packing and shipping large items, such as kayaks and televisions, while the center along I-75 in Ruskin will handle smaller items, ranging from books to electronics and consumer goods.