05/12/2021 | News release | Distributed by Public on 05/12/2021 05:04
Retailers could pay a high price if Florida Governor Ron DeSantis approves three proposed tax-free periods: a disaster preparedness tax holiday at the end of May, a back-to-school tax holiday at the of July, and a weeklong 'Freedom Week' tax holiday starting July 1. Each includes an elaborate series of byzantine price restrictions.
Although the Florida Senate touts House Bill 7061 as a 'broad-based tax relief package,' most of the tax relief will be short-lived and drop a heavy compliance burden on retailers required to temporarily exempt qualifying items from sales tax. Starting July 1, 2021, when Florida's economic nexus law takes effect, some of those retailers will be from out of state.
Perhaps the most convoluted sales tax holiday of the three is a 'recreation' tax holiday the Senate has dubbed 'Freedom Week' (written with initial capital letters), which encourages Floridians to purchase 'admissions and supplies used to enjoy the entertainment options and natural beauty Florida has to offer.' From July 1 through July 7, 2021, the following items would be eligible for a full or partial sales tax exemption:
Sales tax holidays are typically a pain point for retailers, especially those handling sales tax manually. Freedom Week would amplify the pain by providing partial sales tax exemptions for more than 20 products or product categories. Yet HB 7061 would also authorize dealers to absorb the sales tax, meaning they could opt to pay sales tax on behalf of a purchaser. While this would take a bite out of profits, it could help reduce the complexity of compliance.
Freedom Week also creates an exemption for state park annual passes purchased during the July 1-7 window, and for the full price of admissions to certain events occurring between July 1 and December 31, 2021 (provided the tickets are purchased July 1-7). The following types of admissions are eligible:
The other two sales tax holidays described in HB 7061 are more traditional. Though they do have price restrictions, for the most part, they provide full sales tax exemptions rather than partial exemptions.
HB 7061 creates a disaster preparedness sales tax holiday from May 28 to June 6, 2021. Items qualifying for the temporary sales tax exemption include, but aren't limited to:
A proposed back-to-school sales tax holiday would run from July 31 to August 9, 2021. Items qualifying for the temporary sales tax exemption include:
Finally, HB 7061 establishes a permanent sales and use tax exemption for 'items that assist in independent living.' These include:
Businesses aren't entitled to this exemption; it's for individuals only and would take effect January 1, 2022.
Rather than establishing a recurring annual sales tax holiday (or holidays), like other states, the Florida Legislature often provides one or more one-time sales tax holidays. Florida governors tend to approve them because they're popular among consumers, though Gov. DeSantis can be hard to predict.
Yet one-time tax-free periods are hard on retailers, who often receive little advance notice to adjust point-of-sale systems and train staff to meet new obligations each year. That's the case this year: HB 7061 hasn't been signed into law as of this writing, and the first proposed holiday would start May 28.