Carla Jimenez owns an independent bookstore in Tampa, and her top competitor is 3,000 miles away, operating outside the purview of Florida’s sales tax laws.
Hossein Tavana, an avid online shopper who lives in Hollywood, says 60 percent of his purchases take place on the Internet because the Web has the best bargains.
Florida policymakers are considering an “e-tax” law that would help Jimenez compete with the likes of Seattle-based Amazon but would also cost Tavana hundreds of dollars in additional sales taxes a year.
“You have two competing goals that are in direct conflict with one another, from a policy standpoint,” said House Speaker Dean Cannon, R-Winter Park, who leads half of the Legislature’s pro-business, tax-averse majority.
If any of the pending online sales tax bills make their way through the redistricting-focused legislative session this year, Florida would join the growing group of states that collect sales taxes on all Internet retailers.
As the law currently stands, only companies with a physical presence — a store, or warehouse for example — in Florida must pay the state’s 6 percent sales tax.
Jimenez says that’s putting her at a “competitive disadvantage” as she struggles to retain her customer base in an increasingly Internet-driven industry.
“There’s not a day that goes by that we don’t have a potential customer come in and say ‘How much is that? Well, I can get it from Amazon for a cheaper price,’ ” she said. “They start every transaction with a price advantage.”
Trade groups representing business interests have converged on the Capitol this year to push for bills that would pressure online retailers on taxes.
At least three different e-tax bills are in play in Tallahassee — although it will be tougher to pass many laws this year, due to a budget shortfall and the once-a-decade task of redrawing the state’s political districts. There are also small-government activists who claim the bills would create a de facto tax increase on consumers at a time of high unemployment and economic hardship.
Rep. Mike Horner, R-Kissimmee, says a bill he is sponsoring doesn’t add an additional tax but simply clarifies the law about who should pay the taxes that are already on the books.
“It’s state law that if you buy a product, you should pay sales taxes,” he said, adding that his bill, HB 861, “prevents a company from gaming the system.”
Tavana sees it differently. He has already had an unpleasant experience with taxes on an online purchase.
After he remodeled his home last year, the state’s Department of Revenue sent him a letter stating that he may owe taxes on an unspecified item shipped from out of state.
Since 1993, the department has run a program where it randomly inspects records of large trucks shipping goods along Florida’s major interstate highways. On a check last year, officers founds documents showing an item en route to Tavana’s house from US Appliance, a Michigan-based online retailer.
The department sent him a letter in November asking him to pay up. Current law requires consumers to self-enforce the sales tax on their online purchases, but hardly anyone does so.
Tavana plans to fight the charge, which he called a “backdoor tax” and “discriminatory” because it did not apply to all online shoppers. As someone who does a majority of his shopping online, he is against any tax law that would increase his costs in the future.
In Florida, the push to collect taxes from Internet retailers started nearly 10 years ago, but several bills have died in the Legislature. David Hart, vice president of the Florida Chamber of Commerce, said most elected officials, until recently, saw the e-tax as a new tax on consumers.
But that sentiment is beginning to thaw as states across the country seek to boost local businesses and increase tax revenue by going after online retail giants like Amazon and Overstock.com.
After New York passed an online sales tax law in 2008, at least eight other states have followed suit, including five in the past year. This month, Indiana’s government inked a deal with Amazon in which the retailer will begin collecting sales tax in 2014.
According to an estimate by the National Conference of State Legislatures, Florida is projected to lose more than $1.4 billion in revenue in 2012 due to the online sales tax loophole.
State legislatures are also pushing for an e-tax bill in Congress, where there are at least three pending e-tax bills. A 1992 Supreme Court ruling left the door open for Congress to pass laws that would create a national sales tax requirement for online companies.
In the meantime, lawmakers are cooking up a bill that might appease business owners like Jimenez and online shoppers like Tavana.
The Senate’s Budget Subcommittee on Finance and Tax is expected to file a bill this week that allows for taxes on online retailers but would couple them with a tax cut.
Gov. Rick Scott said he could sign an e-tax bill if it included an equal-sized tax cut. One idea is an additional or expanded sales tax holiday for shoppers.
Even with growing support, the bill faces an uphill battle in the preoccupied Legislature. Cannon has indicated that the two top priorities are the budget and major policy issues and that a bill on online retailers might not pass.
But the influential business lobby believes it has enough support from lawmakers to pass a bill.
“We’ve been visiting [lawmakers] in their districts, we’ve been talking to them and we feel that there is an appetite for this,” said John Fleming, spokesman for the Florida Retail Federation. “It’s just a matter of giving the members a chance to vote for it.”