Florida Legislature Passes Significant Sales Tax Legislation

The Florida Legislature passed the most significant Florida tax legislation in recent memory on April 8, 2021. The bill will substantially benefit Florida businesses and taxpayers. As we previously reported, Senate Bill 50 will modernize Florida’s sales and use tax system to impose tax collection obligations on remote sellers and marketplace providers. In addition, anticipated revenue generated by the bill will replenish the reemployment compensation trust fund, with future revenues dedicated to a partial buy-down of the commercial rentals tax rate. Finally, the bill will repeal Florida’s archaic bracket system in favoring of a rounding approach used by virtually every other sales tax state.

While SB 50 remains subject to gubernatorial approval or veto, it seems likely that Governor DeSantis (R) will either sign the bill or allow it to become law without his signature, given its vast improvements to Florida’s tax system and the super majority vote by which SB 50 passed both legislative chambers.[1]  The bill was presented to the Governor on April 12, 2021, and he has until Monday, April 19 to act on the bill.

SB 50 Extends Sales Tax Collection Responsibilities to Remote Sellers and to Marketplace Providers

SB 50 imposes sales tax on “remote sales” and requires tax collection by sellers lacking a physical presence in Florida. Small businesses are excluded from these requirements unless they make a “substantial number of remote sales,” defined as retail sales for delivery into Florida exceeding an aggregate of $100,000 in the previous calendar year. The bill eliminates both the current exemption from local option sales surtaxes for many mail order sales and the increased collection allowance afforded to mail order sellers. These remote seller responsibilities become effective July 1, 2021.

In addition, the bill extends these sales tax collection responsibilities to marketplace providers that facilitate and collect payment for sales made by remote sellers utilizing their platform. A marketplace provider will be required to certify to its marketplace sellers that it will collect and remit Florida sales tax on retail sales made through the marketplace; conversely, such marketplace sellers will be prohibited from collecting sales tax on those sales. The Department of Revenue will likewise be prohibited from collecting tax from both the marketplace provider and the marketplace seller on the same retail sale.

Marketplace providers will be subject to audit and assessment on sales made through their platforms, and the Department of Revenue will be prohibited from auditing marketplace sellers on these transactions, unless the marketplace provider shows that it made reasonable efforts to obtain accurate information on marketplace sales and that any failure to collect and remit the correct tax was due to the marketplace seller providing inaccurate or incomplete information. Regardless, a marketplace provider will be allowed to recover any tax assessment from the responsible marketplace seller, as provided by contract or as otherwise agreed between those parties.   

Certain types of online platforms are excluded from the marketplace provider requirements, including persons solely providing “travel agency services” (e.g., online travel companies) and “delivery network companies” serving local merchants. SB 50 also excludes a “payment processor business” handling payment transactions (e.g., charge cards, credit cards or debit cards) for marketplace sales. Certain large retailers may be eligible for a “large seller exception” to the marketplace provider requirements effective April 1, 2022,[2] allowing such retailers to collect and remit tax directly on their sales made through a marketplace platform. Otherwise, SB 50 imposes those marketplace provider responsibilities effective July 1, 2021, considering sales made during calendar year 2020 in determining whether the thresholds are met.

SB 50 provides a “safe harbor” from potential past tax liability for certain remote sellers and purchasers. A remote seller now required to collect and remit tax is relieved from liability for tax, penalty, and interest due on remote sales made before July 1, 2021, provided that the remote seller registers with the Department of Revenue before October 1, 2021. Similar relief is provided to a marketplace seller for remote sales made before July 1, 2021, which were facilitated by a marketplace provider. Lastly, the bill prohibits the Department of Revenue from using data received from registered marketplace providers or remote sellers for the purposes of identifying use tax liabilities occurring before July 1, 2021.

SB 50 Repeals Florida’s Sales and Use Tax Bracket System in Favor of Traditional Rounding

Historically, Florida has required sales tax dealers to use a sales and use tax bracket system that divides the taxable sales price into tiers for purposes of determining the tax applicable to transactions that fall between whole dollar amounts.[3] This system results in effective tax rates that regularly exceed the tax rate levied. More importantly, Florida’s fairly unique bracket system creates an administrative and IT burden for businesses operating in the state.

SB 50 repeals the bracket system and, instead, requires the tax to be calculated by multiplying the tax rate by the taxable sales price and carrying the resulting tax amount to the third decimal place. If the third decimal is five or greater, the tax amount must be rounded up to next higher whole cent. If the third decimal is four or less, the tax amount will be rounded down to the next lower whole cent. The bill allows this rounding methodology to be applied either to the aggregate tax amount computed on all taxable items contained on an invoice or to the taxable amount of each individual item on the invoice. Dealers may continue using the old bracket system through September 30, 2021.

Tax Relief for Businesses

In addition to the adoption of remote sales and marketplace provider provisions, SB 50 also contains substantial tax relief for businesses.  Initially, the anticipated (and previously uncollected) sales tax revenues from these provisions will be used to replenish the State’s Unemployment Compensation Trust Fund, which was depleted by the pandemic. Then, the bill will provide a permanent reduction of the business rent tax.

Florida’s Reemployment Tax

Florida’s reemployment taxes are paid by employers, deposited into the State’s Unemployment Compensation Trust Fund, and then paid to eligible unemployed workers. Florida law already provided that a worker’s unemployment claims due to COVID-19 should not directly impact the former employer. However, the pandemic’s significant depletion of the State’s Unemployment Compensation Trust Fund and the necessity to replenish that fund triggered an automatic and substantial increase for the forecasted state reemployment tax rates for 2021 through 2024. Economists estimated the reemployment tax increase would be approximately $713 million in 2021 and even more in 2022 and 2023.

SB 50 directs approximately $1 billion of the previously uncollected sales tax from remote sales to be deposited annually into Florida’s Unemployment Compensation Trust Fund until the Trust Fund is replenished to pre-pandemic levels. The bill directs a recalculation of reemployment taxes starting in 2021 to prevent the automatic increase in reemployment taxes otherwise facing businesses, while ensuring that the fund remains solvent for employees when they need to claim their benefits.

Florida’s Business Rent Tax

Florida is the only state that levies a sales tax on the commercial use of another person’s real property. Over the last four years, the Florida Legislature has slowly reduced the state tax portion of the business rent tax from 6.0% to 5.5%.

SB 50 will further slash the state tax portion of the business rent tax from 5.5% to 2.0%. This rate reduction will occur two months after the State’s Unemployment Compensation Trust Fund is replenished to pre-pandemic levels.  State economists estimate that may occur in 2024 or 2025, depending on future unemployment claims. The 3.5% reduction is estimated to save commercial tenants approximately $1.2 billion annually. The local sales surtax portion of the business rent tax rate will not be affected.


SB 50 will modernize and streamline administration of Florida’s sales tax laws, protect Florida businesses from significant increases in reemployment tax rates, end the outdated bracket system, and reduce the unique commercial rentals tax rate. SB 50 substantially benefits Florida businesses and affected taxpayers should closely monitor further implementation of these important law changes. If we can assist you with this or any other state and local tax matters, please contact a member of our State and Local Tax Team.

About the Authors:

French Brown, IV focuses on state and local taxation, governmental relations and lobbying, and administrative law. Prior to joining Dean Mead, Mr. Brown was in private practice at another Tallahassee law firm. He began his legal career at the Florida Department of Revenue, where he quickly rose to the position of Deputy Director of Technical Assistance and Dispute Resolution. Mr. Brown also assists businesses with Florida tax planning and controversies. He may be reached at fbrown@www.deanmead.com.

Mark E. Holcomb has over 35 years of experience practicing in state and local taxation. He represents clients before the Florida Department of Revenue and local taxing authorities, and in litigation at the trial and appellate levels. Mr. Holcomb advises clients on a broad range of state and local taxes, including corporate income and franchise tax, sales and use tax, documentary stamp tax, communication services tax, insurance premium tax, ad valorem tax and motor fuels tax, in tax controversy work and in planning opportunities. He may be reached at mholcomb@www.deanmead.com.

[1] A copy of SB 50, along with bill tracking information and staff analyses throughout the legislative process, is available at the Florida Legislature’s website: http://www.flsenate.gov/Session/Bill/2021/50 The bill passed the House by a vote of 93-24 and the Senate by a vote of 27-12.

[2] As of April 1, 2022, marketplace facilitators will also be responsible for collecting and remitting E911 fees, waste tire fees and lead-acid battery fees on taxable retail sales, as applicable.

[3] An example of the sales and use tax brackets is available here – https://floridarevenue.com/Forms_library/current/dr2x.pdf