Alabama’s counties set to recover online taxes

Alabama remote seller program offers flat 8 percent tax rate, gives 25% to counties

Alabama’s new law for collecting online sales tax got a significant endorsement when Amazon signed on to start paying as of Nov. 1.

The Simplified Seller Use Tax Remittance Act, which was effective Oct. 1, 2015, is a voluntary agreement that sets an 8 percent flat tax rate for companies without a physical presence in the state. Amazon does not currently operate a fulfillment center in Alabama. Roughly 30 other internet retailers have also joined the program.

“If you want to remit sales taxes to Alabama, we’ll make it as easy for you as we possibly can,” said Sonny Brasfield, executive director of the Association of County Commissions of Alabama (ACCA). He confirmed Amazon’s participation. “Sellers don’t have to worry about where they’re delivering, if it’s in a city or a county, the revenue will be divided up.”

ACCA designed the program and shepherded it through the legislative process in 2015. It is not related to the state’s rule setting a $250,000 threshold for internet retailers to collect sales tax that has drawn a lawsuit.

Half of the tax revenue will go to the state, with 75 percent to the general fund and the rest to the education trust fund. Counties and cities will each receive one-quarter of the tax revenue.

“It takes the remote sellers out of the whole process,” Brasfield said. “They just have to make one central payment.”

The ACCA expects the tax to generate $40 million to $50 million in FY17 and perhaps double that the next year.

For remote sellers, participation offers protection from local government audits and changes in federal law that would remove current limits on collecting taxes on internet sales. Businesses registered as simplified-seller participants in would be able to continue collecting the flat tax in lieu of collecting  and accounting for dozens of different local tax rates throughout the state.

“That’s been the selling point for the companies,” Brasfield said.

Morgan County Commission Chairman Ray Long, the current ACCA president, said in his county, the additional tax revenue would go to improving salaries for county employees and upgrading equipment.

“It’s funds we should have had years ago,” he said. “We’re glad these companies realize this is money due to counties; people who use the businesses are realizing it’s due.”