Tuscaloosa County Enters Fight Against Proposed Changes To State's Internet Sales Tax

TUSCALOOSA, AL — The Tuscaloosa County Commission on Wednesday voted unanimously to join a high-profile lawsuit over Alabama’s Simplified Sellers Use Tax (SSUT) program as county officials insist the case threatens a critical source of local revenue.

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As part of the resolution, the commission authorized the county to join ongoing litigation in Montgomery County Circuit Court as a defendant, which comes amid a push for reform to the state's internet sales tax led by the City of Tuscaloosa and Mayor Walt Maddox.

Patch previously reported that the City of Tuscaloosa is also joined by Tuscaloosa City Schools and the City of Mountain Brook, who sued Alabama Department of Revenue (ADOR) Commissioner Vernon Barnett in August.

According to the county’s latest resolution, SSUT — Alabama’s statewide system for collecting online sales tax — has become an “essential source of revenue” for Tuscaloosa County.

"The Association of County Commissions of Alabama (ACCA) is going to intercede in this lawsuit on behalf of counties and any other municipalities that choose to intervene in opposition to changing the SSUT program as it exists," District 1 County Commissioner Stan Acker told Patch on Wednesday. "From our prior resolutions, we aren't in favor of making any changes to it. Obviously, that's not a view shared by others, and so they've decided to go to the courts rather than go to the legislature."

Acker went on to insist that the legislature, which has shown little to no stomach for any proposed changes, is the appropriate forum to decide issues with the state's internet sales tax, not the courts.

"Nevertheless, we feel like the ACCA has elected to intervene, so, as a 'friend of the court,' we will authorize this," he said.

The resolution passed by the commission says that the court set a 30-day deadline on Nov. 10 for any additional parties to seek intervention, which prompted the commission to take action on Wednesday. Officials told Patch they expect most, if not all, of Alabama's 67 counties to commit to opposing the proposed reforms.

Indeed, the vote by the commission on Wednesday represents a more formal step for the county joining the fight against potential changes.

Patch reported in September when the Tuscaloosa County Commission adopted a resolution reaffirming its longstanding position that state lawmakers should reject any legislative efforts that could weaken or dismantle the state's SSUT program.

Meanwhile, Maddox has been far and away the most vocal proponent of changes to the SSUT distribution model and insists that, despite nearly a decade of trying to meet commissioners in the middle to work out some kind of compromise, he has been met with only silence and opposition.

"By taking this step, the County Commission has officially affirmed that stealing earned sales tax dollars from the Tuscaloosa County Schools, Tuscaloosa City Schools, Tuscaloosa County Road Improvement Commission, DCH Health System and local governments is acceptable," Maddox said in a statement to Patch after the commission approved the resolution on Wednesday.

Maddox points out that since the U.S. Supreme Court’s 2018 decision in Wayfair v. South Dakota, states can require out-of-state online retailers to collect the same local sales taxes as in-state businesses — a practice he says is done by dozens of states.

However, Maddox has argued that Alabama has chosen to not modernize and allowed SSUT to remain voluntary for certain businesses that operate online, which was the impetus for the city's current lawsuit against ADOR.

Patch previously reported that Tuscaloosa projected a $14.6 million revenue loss from the program during the last fiscal year, with the city also arguing that the current structure under ADOR also blocks municipalities from auditing participants’ sales.

The figures below were provided by Tuscaloosa City Hall and claim to underscore the amount of SSUT revenue that is being collected but not distributed by the county, to the tune of approximately $8.6 million.

Maddox reiterated this position in a 20-page letter to commissioners on Sept. 24 that provided a wealth of data to reinforce the city's longstanding position.

He has also led the push for destination sourcing — meaning that sales are taxed at the location where the buyer takes possession of the item sold.

Still, the County Commission and Tuscaloosa City Hall remain at loggerheads over the more sweeping changes to the distribution model, as those in support of reforms will likely have to face an unsympathetic legislature that has declined time and again to take up the matter.

"Under this scheme, the community’s schools, healthcare, roads, and public safety are losing," Maddox said of the county's opposition. "The City of Tuscaloosa will continue to fight for the fair distribution of sales tax pursuant to state law."

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