Local county commissions are urging municipal governments to approve resolutions to intervene in an ongoing lawsuit concerning proceeds from the Alabama Simplified Seller Use Tax, the outcome of which could eventually create a big blow to county and municipal funding.
The Alabama Simplified Seller Use Tax (SSUT) Remittance Act, codified in Section 40-23-191 of the Code of Alabama 1975, established a process by which the State of Alabama collects use taxes from eligible sellers on behalf of Alabama consumers, according to wording in the resolution county commissions are urging municipal governments to approve.
The SSUT began in 2016, with 50 percent of online sales tax revenue collected going to the state, where it is further divided, giving 75 percent to the state general fund and 25 percent to the state Education Trust Fund. The remaining 50 percent is split among local governments. Forty percent is given to the counties on a population basis and 60 percent to municipalities on a population basis.
The SSUT was worth around $851.1 million in 2024. It had increased from $386.3 million for fiscal year 2020, according to the Alabama Department of Revenue.
On August 12, the City of Tuscaloosa, the School District of the City of Tuscaloosa, and the City of Mountain Brook filed a lawsuit in the Circuit Court of Montgomery County, Alabama against Vernon Barnett, in his official capacity as Commissioner of the Alabama Department of Revenue, asking the court to direct Barnett to disqualify particular business entities from the SSUT program, according to the resolution.
The three entities joined the lawsuit, arguing that many participating merchants with physical presences in the state should be paying traditional state and local sales taxes. They want to revamp the tax collection system so that retailers with stores and facilities in the state remit to the state for online purchases the same state and local taxes they would for in-store purchases.
For example, if a shopper orders something at a local store and that store has the item in stock, the shopper pays a sales tax on that item, officials cited
However, if a shopper orders an item, and that item must come from out of state, then a usage tax is applied, officials said.
On November 10, the court imposed a 30-day deadline for any other interested parties to file motions to intervene in this litigation, the resolution continued.
Winston County Commission Chairman David Cummings is urging municipalities throughout the county to get involved and pass the resolution to keep proceeds from the usage tax division as it currently is.
At a November meeting, the commission voted to approve the resolution supporting the usage tax benefiting local municipalities.
“The top big mayors in the state are trying to push a lawsuit that they want most of (the proceeds) for their own municipalities,” stressed Cummings.
“This is a long drawn-out story, but we get SSUT coming in, and education gets 25 percent of it. We get 75 percent of everything that comes into Winston County,” Cummings stated.
“It’s a very important part of our budget,” Cummings emphasized. “We don’t need to lose our funding.”
See complete story in the Northwest Alabamian.
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