Small Progress Made In Online Sale Tax Distribution Debate

Meetings between all parties involved in the debate over the way state online sales taxes are distributed have produced at least one agreement. Sen. Greg Albritton (R-22) announced on the senate floor this morning that instead of the current calculation of the Simplified Sellers Use Tax (SSUT) every ten years, the time frame will now be every five years.

"We have been meeting quite often among various groups, all parties," Albritton told the lawmakers. "And we met this morning, also, to try to try to find a path. We're not there yet."

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Albritton went on to say they have reached some consensus on some matters, "...but there are many items in this complicated issue that we have not resolved." The powerful Baldwin County senator did add there is agreement that something must be done in this session, if possible.

Albritton was vehemently opposed to the lawsuit that had been filed by the City of Tuscaloosa, the Tuscaloosa City Schools, Hoover and other large cities against the state over what they consider inequitable distribution of the online sales tax revenues.

At issue is a claim by Tuscaloosa Mayor Walt Maddox and others that the SSUT is unconstitutional and causes massive revenue shortfalls, projecting a $14.6 million loss in fiscal year 2025. The city argued that SSUT improperly allows companies with physical presences in Alabama to use the 8% flat rate, rather than local sales tax rates, and fails to distribute revenue to the specific municipality where the sale occurs.

The lawsuit was strongly opposed by the Alabama County Commissions Association, smaller cities and Albritton.

In reaction, Albritton claimed the lawsuit was unjustified and the disagreement should be settled in negotiations with the legislature and not the courts. In retribution, he voted to delay legal services contracts at the Contract Review Committee meeting that state agencies awarded in response to the SSUT suit.

He also filed legislation to undermine the sales tax revenue that municipalities would collect from people who travelled from different areas and purchase items for their retail stores. Albritton also filed a bill to reallocate fees that municipal courts collected for their operations to the General Fund budget, which he oversees.

Plaintiffs in the case eventually agreed to drop the lawsuit but kept an option open to refile it should there be no progress in rectifying the issue.

The agreement announced by Albritton is a consensus between all parties to reduce the county population calculations from every ten years to every five years. He advised that the agreement only shortens the population calculations period and does no impact the current SSUT in any other way.

Albritton says the purpose of the agreement is to show good faith to everybody in the state that they are working on an issue that is controversial, that is difficult and that they are doing something to attempt to move the issue forward.

The senate adjourned for the week before any other action on the matter could be taken.