Florida Comes at Amazon from a Different Angle

If you asked Republican Kevin Ambler he might tell you that desperate times call for desperate measures. Having a $3.2 billion budget shortfall qualifies as desperate times. So instead of simply mimicking the legislative folly of other states who have put forward Amazon tax initiatives, Florida is intends to get into the software development business.

According to The Daytona Beach News Journal, Ambler has put forward a bill, HB 1443, for the state to fund the development of a software program that would automatically calculate sales taxes on Internet credit-card transactions and collect the money when the product is shipped by the merchant. Florida looses an estimated $2 billion in potential sales-tax revenue each year because out-of-state retailers do not collect it.

Adoption of the software would be voluntary by merchants but the bill does attempt to entice them by including a proposed tax cut. Once Internet sales reached $5 billion in Florida, HB 1443 would allow for the reduction of the current six-cent sales tax by a cent. The plan doesn’t rely on the merchants alone; it gives the state the ability to hire credit card processing companies to collect Internet sales tax on the state’s behalf.

Ambler, who has been quoted by Tampa Bay Online, as saying that “Streamlining doesn’t work because it relies on the same old broken model of relying on merchants collecting it,” feels that development of such software in order to team with credit card processing companies would give the Streamlined Sales and Use Tax Agreement enforcement ability.

Legislation to bring Florida sales tax laws in line with the agreement has been proposed before but has stalled because of concerns over potential short-term reduction in tax revenue. Estimates put forth by watch dog group Florida Tax Watch indicate that the $41.5 million cost of streamlining Florida law would be offset by additional tax revenue of up to $50 million dollars per year with a projected 15 percent annual growth rate.

Florida Tax Watch also urged Florida to take on other measures earlier this month issuing a 125 page report (pdf) on ways to decrease Florida’s budget shortfalls which included the recommendation that Florida should join the Streamlined Sales and Use Tax Agreement. The agreement currently includes 22 states. If Florida were to join it would be the largest state to sign the agreement accounting for one-sixth of the total population of participating states.

In addition to recouping sales tax revenues, Ambler sees other revenue streams that would allow Florida to license the software to other states, thereby creating a second stream of income.

While Ambler’s solution is easily the most creative we’ve heard in sometime it seems to be a lot of flash and no substance. It presupposes a lot of elements that are not currently in place. How long would it take to develop the software? Will credit card companies, payment gateway and merchant services providers buy into providing Florida with such a service when not doing so would give them a competitive advantage? How much would the cost of “hiring” such providers offset the revenue gained? Will Amazon, and others, once again file suit?

Such a bill is a great way for Florida to waste its time spinning its wheels. However, if some enterprising software company is reading this, we expect to see the idea presented at the next DEMO conference.

About Angel Djambazov

Born in Bulgaria, Angel Djambazov has spent his professional career in the fields of journalism and online marketing. In his journalistic career he worked as an editor on several newspapers and was the founding Editor-in-Chief of Wyoming Homes and Living Magazine. Later his career path led to online marketing where while working at OnlineShoes he earned the Affiliate Manager of the Year (2006) award at the Affiliate Summit, and In-house Manager of the Year (2006) award by ABestWeb.

For four years Angel served as OPM for Jones Soda for which he won his second Affiliate Manger of the Year (2009) award at Affiliate Summit.

Currently Angel serves as OPM for KEEN Footwear and MedicalRecords.com. His former clients include: Dell, Real Networks, Jones Soda, Intelius, Graphicly, Chrome Bags, Onlineshoes.com, Vitamin Angels, The Safecig, and Bag Borrow or Steal.

Angel is the Editor-in-Chief and Co-Publisher for ReveNews.com and ReveNews.org.

Angel lives north of Seattle, spending his free time reading up on obscure scientific references made by his wife MGX, while keeping up with a horde of cats and a library of books.

You can find Angel on Twitter @djambazov.

9 Responses to Florida Comes at Amazon from a Different Angle

  1. Why (going by the final paragraph) would it be acceptable for a private software company to do it, but not for the state of Florida to do it? Same plan, different developer, one is bad, one is good?

    You're right that there isn't enough substance, but you're not taking into account that this is an idea in its infancy, and has yet to be fleshed out. Whether or not they do… I can't say. But as a broad idea, I like it.

    I support the collection of sales taxes on online purchases. I strongly oppose using affiliates as the middlemen, as has happened so far.

  2. Melanie Seery, from Affiliate Advocacy, posted about HB 1443 when it first came out and had an interesting response in the comment section from one of Ambler's aides. Worth reading: http://affiliateadvocacy.com/2010/florida-adds-an

  3. Definitely is an interesting bill, Angel. It is almost like the Colorado bill but with a "how to make it more practical to implement" aspect.

    The problem with SSTP is the complexity of implementing it in states like NY, Ca and Fl. It would take years to make all the necessary changes. Several states have said it's just not possible. NY estimated over 10 years to enact all the necessary laws/amendments.

  4. Hi Daniel,

    A software company would simply be more efficient in developing, deploying and selling such a solution. Companies like Avalara.com have already had some success at it. Florida trying to fund creating software from scratch just seems misguided to me but no inherently "bad".

    Angel

  5. Right on, Angel – I gotcha. I'm thinking though, since it's quite unlikely the state has a team of programmers on retainer 😉 that they'll simply contract the job out anyway. It's "who initiates" the creation of it that will probably be contentious, since a lot of people don't like it when the government actually tries to solve problems /shrug

    I dislike talk about how difficult things are to accomplish when they are technology- or computer-based. I'd be willing to bet that a software company with a good team of devs could bang out a fully functional tax collection package in a matter of weeks. After that, a few months to test, polish and refine. After that, a couple of months to add a few last minute features, squash bugs and deploy. I've seen more complicated pieces of software published in far less time than the doomsayers are predicting – doomsayers that all too often have a vested interest in making sure companies online never need to collect sales taxes.

    It's technology. It's not impossible. It's not even improbable.

  6. […] still confound ye old tax collector but a recent story in ReveNews provided a glimpse of how this affiliate tax turmoil might shake out for hard […]

  7. Lance says:

    I am NOT in favour of taxes for online purchases in any shape or form.

    The reasons:

    1/ My business in in State A and sends a product to State B. I have located in State A and pay local taxes to support my business there. I pay wages, pay for utilities, etc., etc. all which are charged taxes that go to my local community (and some to the Govt in Washington as well). Now I'm expected to contribute to taxes in State B? Not fair.

    2/ My products go to State B and in the process of delivery, etc. people are employed, gas is purchased for the delivery vehicle, etc., etc. So the simple delivery of my products (unless they are digital) contribute to State B from a tax perspective.

    3/ How have the taxes I'm supposed to pay to State B contributed to my business? We ALL pay taxes to support our nation and state and county. I don't believe that a State that I don't live in should be allowed to charge me taxes. Are they going to force me to pay taxes on a gift I send to my nephew next?

  8. Flres says:

    Lol I do agree man this country is getting rediculous and if this gets passed I will most likely A. Start a petition against it or B. live this state. We should be pitot petitioning against it right now.

  9. Flres says:

    You sir are just another brain washed pawn I pay enough in sales tax on food, drink, and paper to wipe my ass with as well as income so when I buy something for my personal enjoyment online I expect I don’t pay taxes because it’s just a person like myself selling merchandise via the Internet. If I had to contact the person and send him a money order and ship it to my door it would completely evade that bill. People like you ruin the Internet for everyone.