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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I own a Florida corporation that has started doing online sales.

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I own a Florida corporation that has started doing online sales. Since most of my customer base in is Florida and NY, I don’t want these customers to have to pay online sales tax. According to the law, if I have “a physical location” in a state then I have to pay taxes. If I move my head office to North Carolina then I am assuming that only North Carolina customers will have to pay taxes. What is the definition of a “physical location” for online tax purposes? Can I have a Florida corporation in North Carolina? If not then what does it take to change states of your corporation? (Since we already have an office in North Carolina moving is not a hassle, I just want to avoid the Florida online tax).
Thank You
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

The general rule is - the corporation should charge sales tax from customers and remit to the FL DOR if it has nexus in the state.

 

If sale is made by a dealer located in Florida and delivered to a purchaser in Florida, sales tax would apply. If sale is made by a dealer located outside Florida with no other contact with Florida, and goods are delivered in Florida, use tax applies and is due from the purchaser. Florida law provides that each sale is subject to sales tax unless such transaction is specifically exempt. Under Chapter 212, F.S., there are no provisions to provide an exemption on Internet sales of tangible personal property.

 

Persons who make sales to a purchaser in this state are required to register to collect Florida sales tax if there is sufficient nexus with this state. Nexus is created when a dealer has agents in this state who solicit or transact business on behalf of the dealer and as a result receive orders for merchandise to be delivered to the purchaser in this state; or dealer has a physical location in this state; or dealer delivers merchandise into this state in vehicles which are leased or owned by the dealer; or dealer owns land or buildings located in this state; or dealer stores merchandise in this state for sale or use; or dealer rents or leases merchandise that is located in Florida in the possession of a lessee. If the person selling the property into this State does not have sufficient nexus or is not registered with the Department as a dealer to collect sales tax, the purchaser is obligated to pay use tax.

 

When a corporation has nexus with Florida, there is a requirement to file a Florida return.

 

Please be advised that by not charging sales tax from FL customers - you are shifting tax obligations to customers as they would be responsible for use tax - http://dor.myflorida.com/dor/consumer/ . While at this time states are not pursuing most taxpayers - this tendency might changed because of revenue falling. For instance most states already collect use tax for internet tobacco purchases.

Customer: replied 5 years ago.

 

Thank You that answer is exactly what I was looking for.

 

What would you personally advise for a young company that is flexible?

 

We meet all the requirements except that one of the owners lives in Florida. He does promote the website, but does not take any money or do any transactions. All transactions, orders, sales of any kind are done on the internet.

Does having one owner in the state give us nexus?

 

Again, what would you advise? Should the company just suck it up and make Florida customers pay an online sales tax, or is changing the headquarters a better option?

 

Does it matter that we started the corporation in Florida? Would we have to re-incorporate or is there an easy way to change states?

 

Thank You

Eric P

Expert:  Lev replied 5 years ago.

As long as you are living in Florida and manage your corporation - the FL DOR will consider that the corporation has nexus in Florida and sales tax from selling to Florida residents are expected.

All tricks about moving operations to another state, creating a new corporations are about misleading FL DOR and do not change the situation from the point of view of the law.

 

If you personally will move to the NC and register the corporation there - the corporation will be clear not responsible for FL sales tax.

Any in between might be questioned by the DOR and you might need to provide a proof that you do not have nexus.

Please find here Florida statutes and rules for out-of-state businesses relating to determination of a business connection (nexus) in Florida - http://dor.myflorida.com/dor/businesses/outstatesut.html

 

But - as I mentioned above - your customers will be responsible for use tax.

Currently lots of customers who purchased cigarettes online are receiving use and excise tax bills for purchases made several years ago... and they do not have a choice but to pay the bill...

It is expected that states will go further and become more aggressive in collecting sales and use tax.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22702
Experience: Taxes, Immigration, Labor Relations
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