Taxes, regulations on the docket in Tallahassee

The Florida State Legislature kicked off its 60-day 2020 session Jan. 14. A slate of tax and regulatory bills with potential impact on the business community had been prefiled. Among them:

Business rental tax: Florida lawmakers have chipped away at the state’s Business Rental Tax three straight years. Among likely 2020 legislative proposals is a half-percent BRT cut, which lowers the sales tax on commercial leases from 5.5 to 5% beginning Jan. 1, 2021. Such a 0.5% tax reduction would save Florida business owners an estimated $829 million over the next five years, state economists project.

Other prospective BRT-related legislation could include bills seeking varied exemptions for small businesses of 19 or fewer employees. The Legislature agreed to lower the BRT from 5.7 to 5.5% during its 2019 session. Gov. Ron DeSantis signed it into law, effective Jan. 1. The .2% reduction will shave $64.5 million in 2020 from the $2 billion more than 150,000 state businesses pay annually in BRT,  according to the governor’s office.

Florida has levied the BRT, the nation’s only sales tax on commercial leases, since 1969. The BRT applies to retail, office and industrial leases but does not include hotel or apartment leases. It is imposed on base rent, plus any common-area maintenance fees, property taxes and payments for services including utilities, parking, and janitorial services.

• E-Verify: Lawmakers will again be presented with a proposed bill mandating employers use the federal E-Verify system to validate workers’ immigration status at the behest of Gov. Ron DeSantis to “ensure a safe and legal labor market in Florida.”

Senate Bill 664, introduced by Sen. Tom Lee, R-Thonotosassa, and co-sponsored by GOP State Chairman Sen. Joe Gruters, R-Sarasota, was filed Oct. 24 and assigned to the Senate Judiciary, Commerce & Tourism and Rules committees. It awaits a first hearing. Rep. Cole Byrd, R-Neptune Beach, is expected to file House companion legislation.

SB 664 faces the same uncertain prospects similar E-Verify bills did in 2019 and 2017 and will again draw opposition from Republican-aligned groups, including the Florida Chamber of Commerce, the Florida Fruit & Vegetable Association, the Immigration Partnership and Coalition Fund Coalition, tourism, industry and retail interests. Senate President Sen. Bill Galvano, R-Bradenton, has stated his aversion to the measure.

E-Verify, an electronic federal database created in 1996 and maintained by the Social Security Administration and Department of Homeland Security, is used by more than 700,000 employers and 2.4 million hiring sites nationwide, according to the SSA. The system is required to varying degrees in 20 states, with South Carolina, Arizona and Mississippi adopting mandatory E-Verify bills in the last two years.

• Florida Family Leave Act: Senate Bill 1194, sponsored by Sen. Janet Cruz, D-Tampa, would require businesses to allow employees to take paid family leave for up to three months after the birth, fostering or adoption of a child. The proposal is certain to be opposed by state business interests and is unlikely to advance in the Republican-controlled Legislature.

• Online sales tax: Sen. Joe Gruters, R-Sarasota, has, once again, submitted an “e-fairness” bill for the upcoming 2020 legislative session that he says could generate as much as $750 million a year in revenue for state and local governments.

Gruters’ Senate Bill 126 has at least seven cosponsors and will go before the Senate Finance & Tax, Commerce & Tax and Appropriations committees during the session. Rep. Chuck Clemons, D-Jonesville, and 14 cosponsors, have filed a House companion, House Bill 159, that await first hearings before the chamber’s Ways & Means, Commerce and Appropriations committees.

Florida is one of seven states that does not require remote retailers collect and remit sales taxes from online purchases. Under current state law, residents are supposed to pay the state’s 6% sales tax when they make an online purchase directly to the state unless the retailer does so voluntarily, which many, such as Amazon, do.

In 2019, Gruters filed a similar bill, SB 1112, that would require online retailers that sell at least 200 items or $100,000 worth of items to collect state sales taxes. It passed one committee but advanced no further.

• Workplace discrimination: Democrats have filed several bills that would establish protections for employees based on gender and sexual orientation. Among them:

The Senator Helen Gordon Davis Fair Pay Protection Act, Senate Bill 90, introduced by Sen. Linda Stewart, D-Orlando, and House Bill 739, filed by Rep. Geraldine Thompson, D-Orlando, “from providing less favorable employment opportunities to employees based on their sex.”

The Florida Competitive Workforce Act, Senate Bill 206, filed by Sen. Darryl Rouson, D-St. Petersburg and 14 co-sponsors,  and House Bill 161, sponsored by Reps. Annette Taddeo, D-Miami, and Jennifer Webb, D-St. Petersburg, with 40 co-signers, would add “sexual orientation and gender identity as impermissible grounds for discrimination in public lodging establishments and public food service establishments” and “provide an exception for constitutionally protected free exercise of religion.”

• Occupational licensing/preemption: DeSantis has renewed his call for occupational licensing rollbacks in his 2020 legislative agenda and Rep. Michael Grant, R-Port Charlotte, has again complied with a proposed bill, House Bill 3, that would restrict local governments’ authority to impose regulations on businesses and preempt them from creating their own occupational and professional licensing requirements.

The bill is essentially the same one Grant filed during the 2019 session, also as HB 3, that was adopted by the House but did not advance in the Senate. HB 3 would require existing local business and occupational licenses automatically expire in 2022.

Nearly 30% of Florida’s workforce is employed under occupational license requirements imposed by 23 professional licensing boards — the highest percentage of state-regulated workers in the South and four-highest in the nation.

Among likely opponents is Florida Retail Federation, Florida Auctioneers Association, Florida Association of Cosmetologists & Trade Schools, Florida Association of Counties, Florida League of Cities and an array of labor unions, environmental organizations and civil-rights groups.

• Construction defects: House Bill 295, sponsored by Rep. David Santiago, R-Deltona, and Senate Bill 948, filed by Sen. Dennis Baxley, R-Lady Lake, would eliminate “paltry claims” by redefining “material violation” under the Florida Building Code and revise requirements relating to claims notices.  

The bills are among the Florida Home Builders Association’s 2020 legislative priorities. Neither have received first hearing before committees.

• Communication services tax: Senate Bill 1174, filed by Sen. Travis Hutson, R-Palm Coast, and House Bill 701, sponsored by Rep. Jason Fischer, R-Jacksonville, would establish uniform communications service tax rates on phone services, cable/satellite TV, video and music streaming across Florida’s 482 municipalities, fixing it at 4% for charter counties and cities, and at 2% for noncharter counties on Jan. 1, 2022.

Right now, cities and counties can levy a local CST of up to 5.1%. The local CST provides municipalities with about $400 million annually, according to the Florida Association of Counties.