Tuscaloosa’s Internet Sales Tax Lawsuit Getting Powerful Pushback
Tuscaloosa Mayor Walt Maddox has been aggressively pursuing change to the online Simplified Sellers Use Tax (SSUT). A suit filed by the cities of Tuscaloosa and Mountain Brook and Tuscaloosa City School System claims the internet sales tax violates the state’s constitution.
Their suit alleges individuals, and private corporations do not have the power to levy taxes, which the plaintiffs claim the tax allows.
Plaintiffs in the case allege that the program violates the constitution because the program allows private businesses to opt into the program and gives them the power to decide whether to participate in a tax regulation, a power that the state constitution only gives to the government.
Companies who are eligible for the SSUT program are exempt from collecting sales taxes and disbursing it through the state but could instead charge customers the SSUT tax rate at 8%, less than the combined 10% conventional state and local sales tax rate.
SSUT Suit Draws Opposition at State Level
Maddox's campaign and lawsuit have drawn opposition from the Association of County Commissions of Alabama (ACCA) whose Executive Director Sonny Brasfield, a Tuscaloosa native, has said the suit could cost counties millions. “We think the simplified sellers use tax is well within the constitutional framework that the U.S. Supreme Court gave us in the (South Dakota v.) Wayfair case, and to make any changes puts the money at risk,”
Now powerful Senate General Fund Budget Committee Chairman Sen. Greg Albritton, (R-Atmore), has raised objections to the lawsuit. “Politics has repercussions, decisions have consequences and this decision, this poor decision to bring this suit, is going to have long-lasting difficulties,” Albritton told Alabama Daily News.
“My perception personally is that this lawsuit is dangerous,” Albritton told the committee. “It threatens the fiscal viability of the state that we in the Legislature has worked hard to achieve.”
“This lawsuit, I think, didn’t need to be dropped (filed),” Albritton told reporters following the meeting. “I don’t think it should have been dropped. I think that lies directly between the Legislature’s purview and the legislative role. You don’t need to go to the judiciary. You don’t need to be impatient. You just come here and let’s work it out.”
Mayor Says Lawsuit Was Not an Action Taken Lightly
Contrary to Albritton's comments, Mayor Maddox points out that multiple cities have engaged the Alabama Department of Revenue and the Alabama Legislature to address the SSUT legal flaws. He thinks the issues they have raised are valid and the revenue department is exceeding its authority.
Maddox believes the suit is essential for Tuscaloosa's future. "As is evident from the recent Black Friday and Cyber Monday data," he wrote in response to a Townsquare Media inquiry, "the proliferation of online sales continues while traditional retail sales decline.
"This dynamic is perilous, and failure to address SSUT's legal flaws is dangerous to the fiscal viability of cities and schools across Alabama that depend upon locally generated sales taxes," he added.
Webpage Explains Tuscaloosa View of SSUT
The City of Tuscaloosa website explains the SSUT and the city's proposed changes. It states the SSUT, "...poses a significant financial threat to Alabama communities by diverting tens of millions of locally generated tax dollars away from essential public services each year."
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