The Florida Supreme Court on Thursday upheld the constitutionality of collecting sales taxes on flowers that are ordered online from a Palm Beach County company but get delivered outside of the state.
The unanimous ruling was a victory for the Florida Department of Revenue, which argued that Wellington-based American Business USA Corp. should be subject to the sales taxes, though the company used local florists outside of the state to fill orders.
The Supreme Court overturned a 2014 decision by the 4th District Court of Appeal, which found that collecting the sales taxes would violate what is known as the “dormant” Commerce Clause of the U.S. Constitution.
“American Business is physically located in Wellington, Florida, and operates its business from that location,” Supreme Court Chief Justice Jorge Labarga wrote in a 23-page ruling that was fully joined by justices Barbara Pariente, Peggy Quince and James E.C. Perry. “It benefits from the public safety agencies of the state, as well as other infrastructure and public amenities paid for by state taxes. It benefits from the orderly, civilized society that is afforded it by the state of Florida. American Business has by its presence and transactions in Florida availed itself of the opportunities and protections made possible in part by the taxes imposed on its sales transactions. Thus, there is a reasonable relationship between the company’s presence and activities in the state and the tax at issue.”
Justices R. Fred Lewis, Charles Canady and Ricky Polston agreed with the outcome but did not sign on to Labarga’s opinion.
Attorneys for American Business USA, which operates as 1Vende.com, argued in a legal brief that the collection of sales taxes should hinge on where the sale is “consummated.”
“The sale of delivery flowers here is consummated at delivery, and that delivery occurs outside the state of Florida,” the brief said. “Similarly, the consumer placing the order is not in Florida, the vendor filling the order is not in Florida, the flowers are not in Florida, and the end user is not in Florida. Nonetheless, the florist tax purports to assess a sales tax concerning out-of-state persons, property, and transactions to which the state of Florida has no connection.”
The 4th District Court of Appeal’s decision in 2014 siding with the company found that Florida “impermissibly burdened interstate commerce” when it tried to collect taxes on flowers and other items delivered out of state.
“The vendor’s only connection to the taxing state is that it is registered as a corporation in Florida,” a panel of the appeals court ruled. “The only interaction the out-of-state customer has with the taxing state is by shopping for flowers on a website operated by a company incorporated in Florida. The taxpayer does not maintain any inventory of flowers, gift baskets, or items of tangible personal property within Florida. These goods were not grown in, stored in, or delivered from Florida, and do not have any type of connection to Florida.”
But the Supreme Court disagreed, finding that a “substantial nexus” existed between the company’s sales and the state.
“(In earlier decisions), the law is established that without any physical presence in Florida, the sales tax imposed on American Business in this case for its out-of-state sales to out-of-state customers would clearly be in violation of the dormant Commerce Clause,” Labarga wrote. “However, the record shows that American Business does have a physical presence in Florida — it is headquartered in Wellington, Florida, and has been doing business in Florida since 2001. From its Florida location, American Business accepts internet orders and arranges for delivery of out-of-state flowers and tangible personal property. Based on the facts of this case, we find that the ‘substantial nexus’ test is met.”