Florida Businesses - Do you have out-of-state customers?

If you have a business presence in a state, you must register with that state for tax purposes. Examples of business presence (sometimes referred to as nexus) include:

  • Owning property in that state.
  • Making regular deliveries of your merchandise in that state.
  • Providing repair services in that state.
  • Sending your representatives to solicit orders in that state.

If you sell items to customers in another state, but do not have nexus in that state, you do not have to collect sales tax on the items you sell to them. However, your customers are responsible for paying use tax in their state on the items when they receive them.

  • Use tax is due on the use of items that are brought into the state untaxed. It complements the state sales tax and is charged at the same rate. Use tax applies to purchases from sources such as mail order catalogs, the Internet, television shopping networks, auctions, and toll-free shopping services. The use tax is also due on taxable items purchased during out-of-state travel, when the merchandise is shipped to the individual's home state.

Businesses are encouraged to voluntarily register with their market states to collect sales tax from out-of-state customers. If you voluntarily register to collect tax, you can help prevent your customers from receiving a bill from another state for use tax, penalty, and interest.

How are out-of-state sales tracked?

The Southeastern Association of Tax Administrators (SEATA) shares information to help ensure transactions are taxed fairly across state boundaries. Member states collect and exchange audited sales and purchases information for other member states. Customers who are identified through audit verification are billed for use tax, penalties, and interest.

The SEATA member states are: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia.

Why should I register to collect sales tax for another state?

When a state revenue agency becomes aware of a customer's untaxed purchase, it bills the customer for the use tax, penalty, and interest. Use tax is also due when the purchaser pays sales tax, but the item is brought into a state with a higher rate. For example, if you charge sales tax at Florida's rate of 6%, but the customer lives in a state with a higher rate, that state can bill the customer for the difference.

If your customer receives a bill, a dispute could arise over whose responsibility it is to collect the tax. Even though you may not be technically liable, you provide a service to your customers when you voluntarily register and collect tax.

What happens if I do not register voluntarily?

The SEATA member states exchange information on businesses and their interstate transactions. If you make sales into a member state and do not register, you may be audited by that member state. If your business presence is established in any other member states, you may be liable for all unpaid taxes, penalties, and interest. If you do not have a business presence in a state and do not voluntarily register to collect the tax, your customers could be billed for the use tax, penalty, and interest on their purchases.

Will registration with my market states make me liable for any past sales tax?

Registration alone does not make you liable for past uncollected sales tax assuming you did not have a business presence in the state or collect tax on the state's behalf. If you had a business presence in the state, you are liable for past taxes. If you have a past tax liability in your market states, you should make a voluntary disclosure.

How do I register?

Contact the revenue agency in each of your market states for information and registration forms. The Southeastern Association of Tax Administrators (SEATA) website also has more information, including links to the agencies.