Did an out-of-state jewelry seller create Florida sales-tax nexus through television, Internet sales, and its distribution relationships?

Plain-English summary

An out-of-state jewelry retailer sold to customers through television programs and the Internet. It had no Florida locations, employees, property, storage, or warehouse, accepted orders outside Florida, and shipped purchases by common carrier.

The retailer used a satellite television provider to distribute its programming and a procurer to buy airtime from cable systems. Those parties broadcast or arranged distribution of the programming, but they did not solicit or sell the retailer's products. Florida concluded that the retailer's own activities and those relationships did not create substantial nexus or a taxable presence under the facts provided.

This was a 2008 conclusion based on the physical-presence decisions and mail-order-sales statute discussed in the advisement. The advisement itself warns that later statutory changes or judicial interpretations may produce a different result, so its nexus conclusion should not be treated as a statement of current law.

What this means for you

The ruling turned on the seller's lack of Florida property and employees, out-of-state order acceptance, common-carrier delivery, and the limited roles of the television and airtime businesses. A seller with different activities or operating under later law should not assume the same result.

Common questions

Did broadcasting shopping programs into Florida create nexus in this ruling? No, under the described 2008 facts.

Did the satellite provider or airtime procurer act as a Florida sales agent? The ruling found no substantial nexus from those relationships. The providers distributed programming or obtained airtime, while orders were placed through the Internet or a toll-free number and accepted outside Florida.

Did the retailer have Florida property or employees? No, according to the facts presented.

Is this a current remote-seller nexus rule? The advisement does not establish that. It applies the law and judicial decisions cited in 2008 and expressly warns that later changes may alter the treatment.

Citations and references

• Fla. Stat. § 212.18 (dealer registration)
• Fla. Stat. § 212.0596(2)(e) (mail-order-sales nexus)
• National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967)
• Quill Corp. v. North Dakota, 504 U.S. 298 (1992)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08A-004

Original ruling text

SUMMARY

QUESTION:
•

Taxpayer’s activities do not create a taxable presence in Florida for purposes of
collection and remitting Florida Sales Tax or Use Tax.

•

Taxpayer’s relationship with STP does not create a taxable presence in Florida for
purposes of collecting and remitting Florida Sales Tax or Use Tax.

•

Taxpayer’s relationships with Procurer and cable television providers do not
create a taxable presence in Florida for purposes of collecting and remitting
Florida Sales Tax or Use Tax.

ANSWER: Based on the activities described, neither the Taxpayer’s activities, the Taxpayer’s
relationship with STP, nor the Taxpayer’s relationship with Procurer creates substantial nexus, or
a taxable presence in Florida for purposes of collecting and remitting Florida’s Sales and Use
Tax.

January 29, 2008

XXX
Re:

Technical Assistance Advisement 08A-004
Sales and Use Tax – Jewelry Sales through Television and Internet
Sections: 212.05 and 212.0596, Florida Statutes (F.S.)
Rule: 12A-1.103, Florida Administrative Code (F.A.C.)
Petitioner: XXX (herein Taxpayer)
FEI: XXX

XXX:
This letter is a response to your petition dated May 7, 2007, for the Department's
issuance of a Technical Assistance Advisement ("TAA") concerning the above
referenced party and matter. Your petition has been carefully examined and the
Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-

Technical Assistance Advisement
Page 2

11, F.A.C. This response to your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S.
FACTS
Your letter of June 13, 2007, provides the following, in pertinent part:
Statement of Facts
[Taxpayer], a XXX corporation, is a retailer of gemstone jewelry. Jewelry is sold
directly to customers via television and the Internet. [Taxpayer] has no locations
or employees in Florida and does not maintain or occupy through an agent a place
of distribution or sales, storage, or warehouse in the state. [Taxpayer’s] products
are all located at the [Taxpayer’s] location in [another state] and shipped to
Florida via UPS and UPS-Mail Innovations after purchases are made by its
customers. [Taxpayer’s] shopping programs are transmitted from its studio
located outside Florida. [Taxpayer] reaches/will reach customers via television
via the following agreements:

Technical Assistance Advisement
Page 3

•

[Taxpayer] entered into an agreement with a satellite television provider
(STP). The agreement provides that STP will distribute Taxpayer’s
programming via its satellite distribution system for video and other
programming services. [Taxpayer’s] products are thus available through a
dedicated television home shopping channel, owned by STP. Viewers of
the [Taxpayer’s] channel are able to place orders through the use of a 1800 number. Orders are accepted at [Taxpayer’s] location in [another
state].
[Taxpayer] negotiated the contract at STP’s primary location [outside
Florida]. STP’s equipment is also located [outside Florida]. STP does not
maintain an office or other storage place for [Taxpayer’s] products. STP is
not an affiliate of [Taxpayer].

•

[Taxpayer] entered into an agreement with Procurer. The agreement was
signed at Taxpayer’s office [outside Florida]. The agreement relates to the
purchase of airtime and distribution of [Taxpayer’s] programming on
cable television networks. [Taxpayer] has granted Procurer the right to
negotiate and purchase airtime on specific cable systems in certain
markets specified by [Taxpayer]. [Taxpayer] then makes payment to
Procurer equal to Procurer’s cost for acquiring the airtime, plus a
percentage finder’s fee. In reaching agreements with cable operators,
Procurer may utilize, or allow cable operators to utilize, [Taxpayer’s]
marketing and promotional materials in connection with the distribution,
marketing, promotion, or advertising of [Taxpayer’s] programming.

Neither STP, Procurer, nor the cable operators solicit or sell [Taxpayer’s]
products. STP and the cable operators broadcast the programming of [Taxpayer].
Orders are sent through the Internet or through 1-800 numbers. The orders are
received and accepted in [another state].
REQUESTED ADVISEMENTS
You have asked advice regarding the following:
Whether the [Taxpayer’s] activities, including its relationship with STP and Procurer,
create a taxable presence in Florida for purposes of collection and remitting Florida
Sales Tax or Use Tax.
ANALYSIS and DISCUSSION

Technical Assistance Advisement
Page 4

Section 212.18, F.S., specifically provides that all persons must be registered dealers before
engaging in business in Florida. However, a state's ability to compel an out-of-state vendor to
collect and remit the state’s sales tax is limited by the Commerce Clause and the Due Process
Clause of the United States Constitution. The United States Supreme Court has interpreted these
clauses to require that a seller have a “physical presence” within the taxing state before that state
can require the seller to collect the state’s sales and use tax. See National Bellas Hess, Inc. v.
Department of Revenue of Illinois, 386 U.S. 753 (1967); Quill v. North Dakota, 504 U.S. 298
(1992). In both of these cases, the United States Supreme Court determined that when an out-ofstate seller has no property or employees within a state and delivers its products to customers
within the state by using the U.S. mail service and common carriers, the state cannot require the
seller to collect sales tax on the sales to in-state residents.
The Florida Legislature has clarified when it will require an out-of-state seller to collect
Florida’s sales tax on the seller’s sales of products to customers within Florida. See section
212.0596(2)(e), Florida Statutes. This statute requires an out-of-state seller to collect Florida
sales tax on “mail order sales” when:
(a) The dealer is a corporation doing business under the laws of this state or a person
domiciled in, a resident of, or a citizen of, this state;
(b) The dealer maintains retail establishments or offices in this state, whether the mail
order sales thus subject to taxation by this state result from or are related in any other way
to the activities of such establishments or offices;
(c) The dealer has agents in this state who solicit business or transact business on behalf
of the dealer, whether the mail order sales thus subject to taxation by this state result from
or are related in any other way to such solicitation or transaction of business, except that
a printer who mails or delivers for an out-of-state print purchaser material the printer
printed for it shall not be deemed to be the print purchaser's agent for purposes of this
paragraph;
(d) The property was delivered in this state in fulfillment of a sales contract that was
entered into in this state, in accordance with applicable conflict of laws rules, when a
person in this state accepted an offer by ordering the property;
(e) The dealer, by purposefully or systematically exploiting the market provided by this
state by any media-assisted, media-facilitated, or media-solicited means, including, but
not limited to, direct mail advertising, unsolicited distribution of catalogs, computerassisted shopping, television, radio, or other electronic media, or magazine or newspaper
advertisements or other media, creates nexus with this state;

Technical Assistance Advisement
Page 5

(f) Through compact or reciprocity with another jurisdiction of the United States, that
jurisdiction uses its taxing power and its jurisdiction over the retailer in support of this
state's taxing power;
(g) The dealer consents, expressly or by implication, to the imposition of the tax imposed
by this chapter;
(h) The dealer is subject to service of process under s. 48.181;
(i) The dealer's mail order sales are subject to the power of this state to tax sales or to
require the dealer to collect use taxes under a statute or statutes of the United States;
(j) The dealer owns real property or tangible personal property that is physically in this
state, except that a dealer whose only property (including property owned by an affiliate)
in this state is located at the premises of a printer with which the vendor has contracted
for printing, and is either a final printed product, or property which becomes a part of the
final printed product, or property from which the printed product is produced, is not
deemed to own such property for purposes of this paragraph;
(k) The dealer, while not having nexus with this state on any of the bases described in
paragraphs (a)-(j) or paragraph (l), is a corporation that is a member of an affiliated group
of corporations, as defined in s. 1504(a) of the Internal Revenue Code, whose members
are includable under s. 1504(b) of the Internal Revenue Code and whose members are
eligible to file a consolidated tax return for federal corporate income tax purposes and
any parent or subsidiary corporation in the affiliated group has nexus with this state on
one or more of the bases described in paragraphs (a)-(j) or paragraph (l); or
(l) The dealer or the dealer's activities have sufficient connection with or relationship to
this state or its residents of some type other than those described in paragraphs (a)-(k) to
create nexus empowering this state to tax its mail order sales or to require the dealer to
collect sales tax or accrue use tax.
If the Taxpayer satisfies any of these situations provided by statute, the Taxpayer is required to
collect Florida’s sales and use tax on the Taxpayer’s mail order sales. However, the facts
provided do not indicate that the Taxpayer satisfies any of the situations listed in the mail order
statute.
RESPONSE
Under the facts provided, the Taxpayer is not required to collect Florida’s sales tax on its mail
order sales to Florida customers.

Technical Assistance Advisement
Page 6

CONCLUSION
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which
is binding on the Department only under the facts and circumstances described in the request for
this advice, as specified in Section 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different treatment than expressed in
this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of Section 213.22, F.S. Confidential information must be deleted before public disclosure. In an
effort to protect confidentiality, we request you provide the undersigned with an edited copy of
your request for Technical Assistance Advisement, the backup material and this response,
deleting names, addresses and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department within 10 days of the date of this
letter.
If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850) 922-4727.
Sincerely,

Horace Royals
Senior Tax Specialist
Technical Assistance & Dispute Resolution
HR\
Record ID:

32402