Florida Not Allowed to Tax Out-of-State Internet Sales of Flowers

Monday, November 17th, 2014

 
 
A bouquet of flowers.
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The Fourth District Court of Appeals of Florida ("Court") recently ruled that Florida could not tax out-of-state sales of flowers by a Florida business.

The taxpayer was a Florida corporation that made all of its sales online. The taxpayer sold flowers, gift baskets, and other goods. The taxpayer did not keep tangible personal property inventory in Florida. The taxpayer filled orders through local florists, who used items from their own inventories to fill the orders. The taxpayer collected tax on sales of goods delivered in Florida but did not collect sales tax for sales of goods delivered in other states.

The United States Constitution limits the states' ability to tax activities outside their own borders. A state may tax an activity when the activity has a substantial nexus, or connection, with the state. Generally, states can only collect tax on transactions that happen within the state. States may not control activity in other states, however, and so may not tax activity in other states. If the practical effect of a tax is to control activity outside the state, the tax is unconstitutional.

Florida taxes sales of flowers, wreaths, bouquets, potted plants, and other items of tangible personal property. Florida assessed the taxpayer for tax on out-of-state sales, and the taxpayer protested the assessment.

The Court ruled that Florida could not tax the out-of-state sales of flowers, gift baskets, and other goods. An in-state taxpayer was selling out-of-state goods to out-of-state customers. The taxpayer's connection to Florida was that it registered its business there. The out-of-state customers' only connection to Florida was through accessing the taxpayer's website. The goods sold were not grown in, brought into, stored in, or delivered from Florida. Florida therefore had no connection to the goods or the purchasers. The company's registration in the state was not a substantial connection to the goods or purchasers. Thus, Florida did not have enough connection to the sales to tax them.

http://www.4dca.org/opinions/Nov.%202014/11-12-14/4D13-1472.pdf


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