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MONEY

Amazon.com begins charging tax today in Florida

Wayne T. Price and Ilana Kowarski
FLORIDA TODAY;

Many online shoppers in the Sunshine State might look at today as a dark day — the day when Amazon.com begins charging sales tax to Floridians who purchase items over the wildly popular online site.

But the emotion coming from many independent bricks-and-mortar retailers on the Space Coast is more akin to "hallelujah."

"It definitely helps level the playing field, while making sure we focus on offering an in-store experience that is better than a consumer can get online," said Lisa Fournier, owner of the Melbourne-based Southern Photo. "In some cases retailers have seen about a 10 percent improvement in local sales by having an even playing field for sales taxation."

Florida will be among 21 states collecting sales tax on Amazon purchases. That means everything from books to bedding to electronics purchased over Amazon will cost 6 percent more. Estimates say the tax will mean about $80 million annually for Florida, money the state wasn't getting before. Amazon, founded in 1994, reported $78.12 billion in revenues last year.

"I think it's fair that the tax be collected by Amazon because it's making sales in the state of Florida," said John Kancilia, a Melbourne-based tax lawyer with the GrayRobinson law firm, "because it has a presence in Florida, a distribution center, which causes it to be subject to the Florida taxing authority."

Jan Stewart, a Cocoa Village retailer and co-owner of The Bath Cottage store, said that Amazon has a significant advantage over local shop-owners because it buys in bulk and gets discounts that they do not.

"Small businesses cannot buy in huge volume," Stewart said. "Anything that makes things a little more fair is not a bad idea."

Studies show that the collection of sales tax is having an impact on Amazon.

A recent Ohio State University report found sales dropped for Amazon when the online sales tax charge was introduced. In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states without the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report release earlier this year titled "The Amazon Tax."

Theoretically, when Florida shoppers make an online purchase, at Walmart, for example, then the retailer would collect sales taxes because it has a physical presence in the state. If there is no physical presence, then it's up to the shopper to submit a "use tax" to Department of Revenue. The use tax is the same as the sale tax.

The problem is shoppers rarely submitted the "use tax" payment.

"The question is 'What will consumers do?'" Kancilia said. "Will these consumers patronize instate retailers? Will they leave their homes and their computers and go to a store and buy these goods that they were buying from Amazon? Will they find a retailer, who also is in Florida, online that's collecting the tax, or are they just going to find another online retailer that's not subject to the tax?"

If the latter happens, Kancilia said, and shoppers just use some other online site instead of Amazon, then the playing field won't be as level as some retailers hope. Fournier, and others, believe there needs to be national involvement in collecting sales taxes from online sites.

"I think not only should our state get tougher with other online retail sites, but we should adopt a nationwide sales tax collection system to ensure an even playing field throughout our country," Fournier said. "This affects jobs, commercial real estate, as well as funding our necessary government services."

Contact Price at 321-242-3658 or wprice@floridatoday.com.