Tuscaloosa County Opposes Tuscaloosa’s Online Tax Lawsuit
The Tuscaloosa County Commission is backing up opposition by the Association of County Commissions of Alabama (ACCA) to the City of Tuscaloosa's lawsuit against the Alabama Department of Revenue's distribution of online sales taxes.
County Commission Chair and Probate Judge Rob Robertson told Townsquare Media Tuscaloosa's Sunday public affairs program West Alabama on Point, "I can say unequivocally that the county is opposed to making changes in the current form."
Roberston says he understands the Simplified Sellers Use Tax (SSUT) is not a perfect system, but any change right now would be a knee-jerk reaction. "This will effect a lot of counties and a lot of smaller municipalities all over the state. We don't agree with the position of the City of Tuscaloosa at all on this, but they have their sovereignty, and they can pursue legal actions as they see clear."
Tuscaloosa and the state’s largest cities claim the distribution of online sales taxes is “fundamentally imbalanced,” a “threat to large cities in Alabama,” making it difficult to fund city services.
The SSUT requires remote sellers with more than $250,000 in retail sales of tangible personal property into Alabama to collect sales or use tax on transactions with Alabama customers. It allows remote sellers to utilize a simplified, flat 8-percent use tax program established by Alabama in 2015, instead of a higher, variable rate that includes local sales taxes.
That tax is then is split, with the state receiving 50%, 60% goes to municipalities and the remaining 40% to counties.
According to the plaintiffs, Tuscaloosa, the Tuscaloosa City School System and City of Hoover the current SSUT breakdown is costing Tuscaloosa and other municipalities millions of dollars in lost tax revenue, impacting local budgets, infrastructure, and services like schools.
The lawsuit seeks to implement destination-based sourcing for online sales, which would allocate sales tax revenue to the location where the customer receives the product, not where the seller is located. Mayor Walt Maddox believes the change would help protect local businesses.
The lawsuit also claims a company's physical presence in Alabama, like Amazon and DoorDash, should not be allowed to participate in the SSUT program, but should instead be required to collect and remit traditional state and local sales taxes.
"We think the system, while not perfect, is very reasonable," Roberston told listeners, "The city is already getting the majority of the revenue."
Robertson believes the legislature will address the issue during a future session but doesn't think it will be in the 2026 regular session. "We remain steadfast that this needs to be carefully considered because this is going to open up a lot of issues that have to be resolved legally," the judge added.
The ACCA argues that dismantling the SSUT system would be a "disaster" for counties across the state. Roberston agrees and points out how a change would damage the majority of counties in Alabama that are small and depend on the current distribution of the SSUT. These jurisdictions fear that a new system, where revenue is kept only at the point of delivery, would disproportionately harm them while benefiting larger, regional retail hubs like the City of Tuscaloosa.
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