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August 12, 2002

Leveling the Playing Field for Florida Business, Joint Program Collects $100 Million in Revenue from Out-of-state Sales

TALLAHASSEE - A program to collect tax on items shipped into the state by out-of-state companies has reached $100 million in total collections since it began, the heads of the Florida Department of Agriculture and Consumer Services and the Florida Department of Revenue announced Monday.

"This program has been a tremendous success and helps level the playing field for Florida businesses," said Commissioner Charles Bronson of the Florida Department of Agriculture and Consumer Services (DACS). "We are pleased at the continued success of this joint effort."

The cooperative program is based on the bills of lading provided by freight-truck drivers to DACS law enforcement officers at Florida's 22 inspection stations on major highways leading into the state. The Department's officers provide digitized images of the bills of lading to Florida Department of Revenue agents based in Marianna, Lake City and Jacksonville, who review the bills of lading for major purchases of taxable items being shipped into Florida from sellers outside the state. Under Florida law, such purchases are subject to use tax, which is the equivalent of state sales tax. If neither the seller nor buyer pays use tax in returns filed soon after the item is shipped into the state, Department of Revenue agents follow up by notifying the buyers that they may owe tax. Buyers are asked to voluntarily disclose the tax due, if it has not been paid. As an incentive to encourage taxpayers to comply with the law, DOR customarily waives penalty payments.

While Revenue agents sometimes contact consumers who buy big-ticket items such as furniture out of state and have it shipped here, most of the contacts involve purchases of business equipment where substantial amounts of tax are owed. Revenue agents also use this information to help businesses register to collect, report and remit sales tax when Florida law requires them to be registered.

In all, the program collected more than $72 million in direct voluntary payments received as a result of follow-up contacts since it began in March 1993. Another $27 million was collected after Revenue agents were able to bring companies into compliance with state law and register them to collect state tax. In total, the program collected $100,028,599.73 since it was founded. The program has been cited as a leading example of use-tax compliance programs nationally.

"We believe this program has demonstrated a positive return on investment in several ways," said Jim Zingale, executive director of the Department of Revenue. "Not only does the program collect revenue that is used to finance such vital public services as education and law enforcement, it also helps encourage fair competition for Florida businesses. An important requirement of tax law is that it treats all involved fairly and equitably, rather than giving an unintended competitive advantage to one business over another. We at the Department of Revenue appreciate the partnership of our colleagues at Agriculture and Consumer Services. Without their assistance, this program would not have been possible."