2004 SSTP Bill  
STREAMLINED SALES TAX BILL INTRODUCED AGAIN

After an unsuccessful effort during the 2003 legislative session, legislation has again been prefiled that would add Florida to the list of states legislatively ratifying the multistate Streamlined Sales Tax Agreement. State revenue departments support implementation in the hope that Congress will require remote sellers to collect use tax on mail-order sales. Business interests have supported the project in the hope of tax standardization and simplification. This year’s bill (SB 1072) is essentially identical to last year’s failed bill, in the form the bill had assumed by the end of the 2003 session. Among the changes that would be made to existing Florida sales tax law are the following: • Transportation and delivery. The statutory definition of “sales price” would be amended to include “all delivery charges.” Under existing judicial interpretations and Department of Revenue Rules, separately-stated transportation and delivery charges payable to the seller of goods are not taxable in some circumstances, such as when they are optional with the purchaser or when the goods are shipped F.O.B. point of origin. Taxation of all delivery charges is not required for compliance the SSTA, which permits seller’s service charges, delivery charges, installation charges, and trade-ins, to be excluded from taxable sales price if separately stated. • Motor vehicle leases. Effective with leases or rentals started January 1, 2005, or later, the present special rules for motor vehicle leases would be repealed in favor of the SSTA sourcing rules and standardized definition of “lease or rental.” Among other changes, the lessor of a commercial vehicle no longer will have the option of paying tax on the purchase price of the vehicle and leasing the vehicle tax-free. • Computer software. Under present interpretation of Florida law, sales of “canned” or prewritten software delivered on tangible media are taxable, while sales of custom software and customized prewritten software are considered nontaxable service transactions. In addition, under current Department of Revenue administrative interpretations, even sales of “canned” software are not taxable if the product is electronically downloaded rather than being transferred on a tangible medium. The bill arguably would render sales of electronically downloaded, “canned” software taxable. The bill clearly would change the law with respect to customized prewritten software, which would become taxable except for any separately stated customization charges. • Refunds. Standing to claim tax refunds – already a muddy topic in Florida law – would be further complicated by the addition of a requirement that a purchaser first apply to the seller for a refund before applying to the Department of Revenue. This change is not required to conform to the SSTA. • “Digital goods.” The bill would adopt the “sourcing” rules of the SSTA, by which the sales tax situs of multi-jurisdictional transactions is determined. One feature of these rules, incorporated into the bill, is a sourcing rule for “digital goods.” Neither the SSTA, in its present form, nor the bill defines the term “digital goods.” Aside from the sourcing rules, the bill would not change existing rules by which sales of electronically delivered items that might be termed “digital goods” – such as software, music, or even certain information – presently escape taxation. It remains to be seen whether the Department of Revenue might argue that the adoption of sourcing rules indicates a legislative intent to tax such “digital goods.” • Medical exemption. Definitions changes to conform to the SSTA will exempt sales of certain items that presently are taxable, and will tax certain items that presently are exempt. • Groceries exemption. Definitions changes to conform to the SSTA will change the taxability of some sales, such as sales of certain fruit beverages, candy items and baking chocolate, and ice cream novelty items.

Posted: 2004-02-13 00:00:00.0

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