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Court: Taxing Out-Of-State Flower Deliveries Fails Smell Test

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TALLAHASSEE (CBSMiami/NSF) - An appeals court Wednesday ruled that it is unconstitutional for Florida to try to collect sales taxes from a Palm Beach County company that takes online orders for flowers delivered in other states or countries.

The 4th District Court of Appeal, siding with the Wellington firm American Business USA Corp., found that Florida "impermissibly burdened interstate commerce when it taxed out-of-state customers for out-of-state deliveries" of flowers and other items such as gift baskets.

"The vendor's only connection to the taxing state is that it is registered as a corporation in Florida,'' said the nine-page ruling, written by Judge Spencer Levine and joined by judges Jonathan Gerber and Mark Klingensmith. "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."

The decision came after a state administrative law judge last year said the Florida Department of Revenue could collect the sales taxes. The company, doing business as 1Vende.com, charged customers for sales taxes on flowers and gift baskets delivered in Florida but did not do so when the online orders were delivered by florists outside Florida. Wednesday's ruling said the company primarily sold to customers in Latin American markets.

In a brief filed in the South Florida appeals court, the Department of Revenue said state law imposes sales taxes on florists who do business from a "physical presence" in the state. It said at least 30 other states have taken similar stances.

"The physical presence of a florist in the state provides a minimum connection for the Legislature to tax sales activities by the vendor,'' the Department of Revenue brief said. "Although some of the flowers may have been delivered to a foreign destination, the actual sales 'activity' on which the tax is imposed, took place in Florida. Florida has lawfully imposed a tax on the sales activities of florists, in Florida, not on the delivery activities of third parties abroad. Title to the flowers constructively passed as soon as the sale was accomplished by the Florida florist, in Florida."

But the appeals court found that imposing the tax on the sale and delivery of flowers outside Florida violates what is known as the "dormant commerce clause" of the U.S. Constitution. Broadly, that legal concept is aimed at preventing state actions that interfere with interstate commerce, the ruling said.

The judges, however, ruled in favor of the department on another issue in the case about taxing the sale of prepaid calling arrangements sold online by the company. It found that those sales have the required "substantial nexus" to Florida.

"In contrast with tangible personal property, prepaid calling arrangements are sold and delivered by the taxpayer through the Internet,'' the ruling said. "Delivery is effectuated by the taxpayer sending an authorization code directly to the customer via the Internet. This makes the sale of prepaid calling arrangements unlike the sale of tangible personal property, such as flowers and gift baskets."

The News Service of Florida contributed to this report.

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