A Florida District Court of Appeal has ruled that sales of flowers by a Florida-based business via the Internet to customers located outside Florida violated the Commerce Clause of the U.S. Constitution and were not subject to the Florida sales tax.1 Conversely, the Court determined that Internet sales made by the same business of prepaid calling arrangements to customers located both within and outside Florida were properly subject to sales tax.
Background
The Florida-based taxpayer specialized in the online sale of flowers, gift baskets, and other items of tangible personal property, as well as prepaid calling arrangements, to customers located throughout Latin America, Spain, and the United States, including Florida. All of the company’s sales were generated via the Internet and the taxpayer maintained no inventory. Orders received by the taxpayer for tangible personal property, including flowers, were filled by “local” florists.2 However, the goods were not grown in, stored in, or delivered from Florida. The taxpayer did not charge its customers sales tax on sales of flowers, gift baskets, or other items of tangible personal property delivered outside Florida. Also, the taxpayer did not charge its customers Florida sales tax on any sales of the prepaid calling arrangements.
The Florida Department of Revenue issued a proposed assessment against the taxpayer including both taxes and interest on all of the taxpayer’s sales of prepaid calling arrangements occurring between April 1, 2008 and March 31, 2011, as well as all sales of flowers and gift items to non-Florida customers during the same period. Also at issue was whether the taxpayer’s books and records were inadequate and whether the taxpayer retained statutorily mandated records of transactions. Due to the limited records produced by the taxpayer, the Department relied upon estimated sales amounts to determine the amount of assessment.
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