On April 19, 2021, Florida Governor Ron DeSantis signed S.B. 50 (2021), which will finally eliminate the antiquated bracket system that has always been used to calculate sales tax, replacing it with an algorithm. The algorithm requires sales tax to be calculated using three decimals, rounding up when the third decimal is greater than four. Historically, retailers had to program their point of sale (POS) systems to calculate sales tax on published brackets.
Pursuant to S.B. 50, changes are effective July 1, 2021; however, Florida has provided retailers until September 30, 2021, to implement such POS system changes. Between July 1 and September 30, 2021, retailers are allowed to use either the old bracket system or the new algorithm method.1
Florida was one of the few remaining states that still used a bracket system.2 The algorithm Florida is now adopting is used by the majority of states and is the same rounding method required of member states that are parties to the Streamlined Sales Tax Agreement. This transition to the algorithm method will make compliance much easier for taxpayers.
The implementation of the algorithm method was just one of the sales tax changes from S.B. 50. For more information on other tax provisions provided in S.B. 50, please refer to Ryan’s tax development Florida Establishes Rules for Remote Sellers and Marketplace Providers.
1 Florida S.B. 50 (2021); see also Florida Tax Information Publication No. 21A01-02 (April 28, 2021).
2 Alabama and Maryland still use the bracket system.
TECHNICAL INFORMATION CONTACTS:
Susan Bittick
Principal
Ryan
512.476.0022
susan.bittick@ryan.com
Clara Kippes
Principal
Ryan
954.740.6240
clara.kippes@ryan.com
Julie Moore
Director
Ryan
904.680.5660
julie.moore@ryan.com
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