Legislation regarding the application of sales and use tax to tangible items purchased via an online or mail order transaction was passed by the Senate Finance and Tax subcommittee this week.  The legislation originally proposed to apply the sales and use tax to online transactions and utilize any increased revenues to reduce the current state communications services tax rate, as well as the state tax on satellite television service.  The rate reductions were included in the legislation to assist in obtaining a revenue neutral fiscal impact. However, the proposal would have had the unintended consequence of reducing local government revenue sharing funds, as well as funding for several fiscally constrained counties.  During the committee hearing an amendment was proposed and adopted removing the harmful language from the bill.  The legislation as amended now heads to its final committee of reference, Senate Appropriations.

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Comprehensive Property Tax Bill (SB 1830/HB 7159)

  • Summary
  • Comprehensive property tax legislation that provides for the following:
    • accommodates the use of commercial mail delivery service by taxpayers,
    • authorizes the use of electronic mail by property appraisers and value adjustment boards,
    • requires notices related to tax roll certification to be provided on websites,
    • provides long-term lessees the ability to retain homestead limitations in certain instances,
    • conforms appeal and penalty provisions,
    • provides for an automatic renewal for “granny flat” assessment reductions,
    • deletes a statutory requirement related to homestead that has been ruled unconstitutional by the Florida Supreme Court,
    • clarifies the ability of local governments to provide property tax exemptions for persons 65 and older,
    • repeals the ability for limited liability partnerships to qualify for the affordable housing property tax exemption, and
    • amends the calculation of payments required by Martin County to St. Lucie County for the county boundary line change passed in 2012.
  • Status
  • The Senate Finance and Tax Sub-Committee passed the legislation without opposition.  The senate PCB 7130 has now been filed as a committee bill SB 1830 and has one reference (Senate Appropriations) before heading to the senate floor.
  • The House Finance and Tax Subcommittee passed its version (PCB FTSC 13-08).  The bill has now been re-referenced as HB 7159 and is has been referenced to the House State Affairs Committee before heading to the floor.
  • The legislation is neutral to positive for county governments.  It addresses an administrative glitch created by implementing language for amendment 11 (2012), which was passed during the legislative session.  It also includes language to address the affordable housing loophole that counties have been advocating for on behalf of potential property tax revenue loses.

 

Communications Services Tax (CST)

House Finance and Tax Subcommittee (conceptual)

  • Summary:
  • Concept of reforming the CST to consolidate the taxation of communications services into a single unified statewide rate, regardless of the delivery medium or location of the services user.
  • Consolidation is intended to be revenue neutral from both the state’s and any individual unit of local government’s perspective.
  • To achieve that overarching reform objective, the concept language replaces local government communications taxation authority with a state revenue sharing arrangement, modernizes the definition of “prepaid calling arrangements” and applies the single unified rate to sales of such arrangements, removes an exemption on residential land line service, and reduces the collection allowance granted to dealers of communication services.
  • The concept language also eliminates the authority of local governments to levy permit fees on dealers of communications services but will grandfather in any local governments currently levying such fees to maintain revenue neutrality.
    • Status
    • The conceptual language is still under evaluation by the revenue estimating conference. There is no senate companion of the house conceptual language and no date for a bill hearing.  

 

Value Adjustment Boards

HB 1381 (R.Wood/House Finance and Tax Committee); SB 1754 (S. Evers)

  • Summary:
    • The bill contains several substantial changes to ch. 194, F.S., relating to the value. adjustment board review of property tax assessments, exemptions and classifications.
    • The bill amends the current make up of the VAB to now include three citizen members and only two elected officials.
    • The conceptual language is still under evaluation by the revenue estimating conference. There is no senate companion of the house conceptual language and no date for a bill hearing.  
      • Status
        • HB 1381 was heard and passed by the House Finance and Tax committee.  The bill passed by only one vote. The next committee of reference is House Local and Federal Affairs.
        • An issue stakeholder meeting was held on Friday, April 12, 2013 to discuss potential impacts of the proposed legislation.  FAC was represented by Davin Suggs.
        • The senate version has not been heard as of yet.

 

Local Business Taxes

House Finance and Tax Subcommittee (HB 7109)

  • Summary: The draft language embodies concepts with an overarching purpose to replace the current local business tax structure in ch. 205, F.S., with a simplified version of the tax that is more consistent across various business types and among taxing jurisdictions. This is accomplished by:
    • Establishing a uniform classification system.
    • Establishing a flexible rate structure.
    • Grandfathering certain local taxing jurisdictions to allow taxation under the current structure to continue under specified circumstances.
    • Eliminating “overlap” of city and county taxes.
    • Retaining current local administration of the tax.
    • New structure would become effective October 1, 2014, with a transition process from the current structure to the new structure, and allowing taxing jurisdictions to replace revenues raised under the prior system.
  • Status
  • The House Finance and Tax committee bill introduced and passed HB 7109.  FAC staff expressed concerns on behalf of some of its members and will continue to work on the bill.
  • HB 7109 has been referenced to the Local and Federal Affairs and Economic Affairs committees.  The bill has yet to be scheduled on an agenda as of yet.

 

E-911 Fees

HB 807 (R. Steube)/SB 1070 (S. Hays)

  • Summary:
  • Currently, prepaid communications are not included in the base of services subject to the application of E-911 fees which fund E-911 operations in Florida Counties. The bills include prepaid communications in the base of E-911 fee assessments.
    • Status:
    • Three referrals in House and Senate; Scheduled for review by the Revenue Impact Conference on Friday, March 8, 2013.
    • HB 807 was passed unanimously by the House Energy and Utilities subcommittee on 3-12-13 and passed with no opposition in the House Finance and Tax subcommittee on 3-22-13.  It was passed by its last committee of reference and is now headed to the House floor. FAC staff provided supporting testimony during the referenced bill hearings.
    • The Senate bill was heard on 4/1 in the Communications, Energy and Utilities committee and was substantially be amended to remove provisions similar to HB 807 and instead extends the current moratorium on collection of prepaid fees until 2015.

 

Internet Sales Tax

  • Summary:
  • HB 7097 Relating to Tax on Sales, Use, and Other Transactions
  • HB 505 (R. Rehwinkel-Vasilinda) relating to Streamlined Sales and Use Tax Agreement
  • SB 88 (S. Margolis) relating to Mail Order Sales
  • SB 316 (S. Detert) relating to Taxes
  • HB 497 (R. Moskowitz) relating to Small Business Fairness Act
  • A common goal is to address the taxation (Florida sales tax) of sales by out-of-state retailers conducted over the Internet.  Although this concept is expected to produce a positive fiscal impact, some of the bills also employ reductions in other taxes to create a revenue neutral scenario.
    • Status
    • SB 316 has passed its first committee of reference and has three additional committee hearings scheduled; REC returned an indeterminate fiscal impact on 3-1-2013.
    • Other bills have not been heard by their respective first committees of reference. 
    • PCB FTSC 13-02: House Finance and Tax Committee introduced PCB FTSC 13-02 – Relating to Sales and Use Tax on 3-14-13 during their scheduled committee meeting. 
      • PCB amends s. 212.0596, F.S., to provide that a “mail order sale” includes the sale of tangible personal property over the internet.  The bill creates s. 212.0802, establishing a recurring sales tax holiday on clothing and school supplies. The length of the holiday will be determined each year by the REC to reduce total sales tax collections by at least the amount of new collections received pursuant to the changes to the mail order sales statute in the bill.
      • Once the House PCB has been introduced, it will then receive committee references and be submitted to the REC for further fiscal analysis.
      • PCB FTSC 13-02 is now referred to as HB 7097 (3/22/13) and is referenced to be heard in House Appropriations at a date yet to be determined.
      • SB 316 passed its second committee of reference, however, potentially harmful language to counties and cities was removed via an amendment.  The bill is scheduled to next be heard by the Senate Appropriations committee at a date yet to be determined.

 

Commercial Rentals

HB 629 (R. O’Toole)/SB 656 (S. Hukill)

  • Summary:
  • Currently, commercial rentals are taxed at 6% at the state level, plus the local discretionary surtax. Bills would phase out the sales and use tax on commercial rentals by reducing the tax rate by 1% per year and completely repealing both state and local sales and use taxes in the year 2019.
    • Status:
    • Three referrals in House and Senate; workshopped in H. F&T. Not yet on committee agenda.
    • Proposal identified by the Florida Association of Realtors as its primary legislative objective for 2013. According to the Florida Revenue Estimating Conference, this proposal would have a negative recurring fiscal impact to local governments of $386.2M annually.