Michigan and Florida State Legislators Introduce Sales Tax Fairness Bills

With the status of federal sales tax fairness legislation up in the air as the lame-duck Congressional session nears a year-end close, legislators in two states are fashioning their own sales tax fairness solutions. Lawmakers in Michigan and Florida recently introduced affiliate nexus bills that would require remote retailers with a presence in the state via online affiliates acting as sales agents to collect and remit sales tax. Both bills have a small business exemption that stipulates a remote retailer’s gross sales must exceed $10,000 in the state to have nexus in the state.

In Michigan, state Rep. Eileen Kowall (R-White Lake Township) and state Rep. Jim Ananich (D-Flint) introduced HB 5004/5005 [1], which requires remote retailers with online affiliates, an office, distribution facility, warehouse, storage place, or similar place of business in Michigan to collect and remit sales tax on orders made by Michigan residents.

In late November, soon after the bill was introduced, the Michigan Retailers Association (MRA) issued a press release urging lawmakers to enact the legislation to both level the playing field for Michigan retail businesses and to pay for personal property tax relief and other steps to continue to reinvent the state’s economy.

“Now is the perfect time to pass Main Street Fairness, because holiday shopping has focused increased attention on the importance of Michigan’s retail industry to the state’s economy,” said MRA President and CEO James P. Hallan in a statement. “Cyber Monday set records for online shopping and underlined the need for state government to treat all retailers the same and not favor out-of-state businesses at the expense of Michigan job makers. At the same time, legislators are looking at ways to be able to provide substantial personal property tax relief to job-creating businesses.”

MRA’s release noted that Public Sector Consultants concluded last year that a level playing field would increase sales at Michigan retailers by as much as $126 million per year and create up to 1,600 additional retail jobs.

This week, Reps. Kowall and Ananich wrote a guest [2]column [2] for MLive.com in which they stressed the need for sales tax fairness: “During this holiday season, no one would imagine sneaking into their neighbor’s home and stealing presents, but that is essentially what these online sites are doing by using this loophole to cut into sales of workers and business owners who work hard to earn their living. The need to close this loophole became even more apparent as an estimated 40.7 percent of Black Friday shopping was done online, according to USA Today.”

In Florida, state Sen. Gwen Margolis (D-Miami) recently introduced Mail [3]Order [3]Sales [3]( [3]SB [3]88) [3], a bill that would require remote retailers that have online affiliate, office, distribution facility, warehouse, storage place, or similar place of business in the state to collect and remit sales tax for purchases made by Florida residents.

Jeff Branch, the senator’s senior legislative assistant, told Florida’s News [4]Herald [4] that SB 88 would recoup between $800 million and $1 billion in uncollected sales taxes.

Florida state Senator Bill Montford (D-Tallahassee) told the Herald that “there are some who would say this is an increase in taxes or an additional tax. I take a different viewpoint. This is an uncollected tax. This is a tax already owed the state of Florida.”

SB 88 been referred to three state committees: Commerce and Tourism, Appropriations Subcommittee on Finance and Tax, and Appropriations.