Let’s say Danny wants to buy a big screen television for $2,000. He goes out to jimbosfabuloustvs.com (I certainly hope nobody has that URL) based in Kentucky and places his order.
Now an appliance this big isn’t going to be sent UPS. There is an entire industry of shipping companies out there who do, what is called, “home delivery.” This involves not only shipping and delivering the item, but also setting up and installing. They typically deal with items like appliances and furniture…the kind of thing you really don’t want to find leaning up against your door when you get home from work.
Now Danny thinks he’s saved himself $140 in Florida sales tax by buying out of state. But what the poor guy doesn’t know is that when that “home delivery” truck enters Florida, it’s stopped at one of Florida’s fine agricultural inspection stations. They then scan the bill of lading and send it to Tallahassee. A letter is then prepared and sent to Danny which reads something like this:
You recently received a television from Jimbo’s Fabulous TV’s. Our records do not show this vendor as registered to collect sales and use taxes in Florida. Enclosed is a brochure describing all citizens’ Florida use tax responsibilities. We estimate the value of your purchase to be approximately $2,000. Therefore, we will be expecting a check from you for 7% of that amount within 30 days. If the amount of your purchase was different than our estimate, please take 7% of the correct amount and send us a copy of the invoice. If taxes WERE collected by the vendor, please send a copy of the invoice with no remittance.
Thank you, and welcome to Florida.
Florida is the only state that I know of that does this. I believe they are unique for a couple of reasons:
1. They don’t have an income tax. And states that don’t have an income tax get a little nutty about their sales tax.
2. They already have the infrastructure in place. I was talking with someone from the state of Florida about this and he told me that they had very little cost to get this program going. They only had to buy scanners for the stations and hire some people in Tallahassee.
3. If you’re heading into Florida on Interstates 10, 75 or 95…where else are you going? Florida is the only state where, if you enter it, you are likely destined for the state. No other state could do this because so much of the traffic is just crossing the state. It would be impractical to scan all of the bills of lading at the entry point.
I did have one seminar participant who said, “Well, the truck could be heading for Cuba.” I sent him to the Remedial Geography class across the hall and we moved on.
Finally, I was reminded to tell this story because I just finished up a seminar series in Florida. Almost every day, someone in the class told me a story like this one.
First, if you’re shopping for a big appliance or furniture in Florida, you’re gonna pay the tax. One way, or the other.
Secondly, if you're from another state, they DO have ways of finding you. Florida's method is unique, but the states have other ways.
The Sale Tax Guy