In the final year of the quadrennium with minimal conflict, lawmakers ended the Alabama Legislature’s regular session early while enacting some substantial legislation significant to retailers. No legislation Alabama Retail actively opposed became law. For 71 years Alabama Retail has advocated for legislation that benefits your business, while protecting retailers from potentially damaging legislation. During the 2014 regular session, your association kept you posted on 125 retail-related bills in its weekly e-newsletter, Capitol Retail Report. When the 2015 regular session begins Tuesday, March 3, your Alabama Retail governmental affairs team will be there again benefiting you.
Independent Tax Appeals Coming Oct. 1
As of Oct. 1, Alabama becomes the 32nd state with an independent tax appeals process, The Taxpayer Fairness Act of 2014 removes the tax appeals process from the collecting authority. On May 19, Gov. Robert Bentley appointed Judge Bill Thompson as the chief judge for what could eventually be a three-judge tribunal. The Alabama Retail Association and 26 other members of the Business Associations’ Tax Coalition advocated for this landmark legislation. Learn more about the Taxpayer Fairness Act of 2014. Act No. 2014-46
Smallest Retailers to Remit Sales Taxes After the Fact as of Aug. 1
Starting Aug. 1, retailers collecting less than $2,500 in state sales taxes on average each month (about $62,500 in monthly sales) no longer have to estimate their sales tax obligation in advance. At least 4,000 small retailers will see one-time tax relief of up to $2,500 under the Small Business Tax Relief Act, a part of Alabama Retail’s 2014 State Legislative Agenda. Those between the previous $1,000 and the new $2,500 average monthly state sales tax collection threshold effectively will skip a month (August) of making estimated sales tax payments and instead will start remitting actual taxes collected. August sales taxes will be due in September. Act No. 2014-316
No More Confusion: Sales Taxes Due on Prepaid Wireless Service
As of July 1, Alabama’s sales tax law related to prepaid wireless services will be updated for the 21st century. The new law makes it clear that even in the absence of a physical card, sales tax is owed on prepaid wireless services. The law also adds definitions to match today’s technology to include other digital products and content that are paid for in advance and sold in predetermined amounts that the consumer can use until the amount is consumed. The updates apply to all open tax periods. Act No. 2014-336
Bad Check Law to Extend to Electronic Versions
Starting July 1, anyone passing electronic drafts knowing that the funds are not in place to cover the draft will be subject to the same penalties as when presenting a bad check. The Worthless Check Law section of your Retailer’s Guide will be updated to reflect the law change. Act No. 2014-444
Better Business License Identification Begins Oct. 1
Starting Oct. 1, those applying for or renewing a business license will have to include their business federal identification number or a Social Security number as a first step toward county/state business license reform. Act No. 2014-430
AG to Combat Patent Trolls
Starting July 1, Alabama’s attorney general will investigate complaints against those who assert patent infringement in bad faith. Entities that do not produce or sell any products or administer services but are created solely to generate a revenue stream from patents are known as patent trolls. The Alabama Retail Association continues to be a part of the Main Street Patent Coalition, which seeks to stop frivolous lawsuits filed against restaurants, supermarkets, hotels and other brick-and-mortar businesses by patent trolls, or patent-assertion entities. Act No. 2014-218
Short Form Business Personal Property Returns Coming in Fall
By Oct. 1, small businesses that have filed an itemized personal property tax return that included $10,000 or less in total property acquisition costs in the previous tax year can use a new short tax form. When using the short form, $10,000 would be used by the local tax assessor as the market value when calculating taxes due, rather than an itemized return. The average tax liability would be less than $100 for businesses in most localities. By Oct. 1, 2016, businesses will also have the option of filing business personal property tax returns online, giving business owners a one-stopshop for submitting those taxes to each of Alabama’s 67 counties. Act No. 2014-415
Revenue Department Can Suspend Administratively Costly Taxes
Starting July 1, the Alabama Revenue Department can suspend the collection of a tax or fee when the administrative costs of collecting exceed the collection amount for each of the previous three fiscal years. Alabama’s tax on playing cards may be one of the first taxes to be suspended by administrative rule. Act No. 2014-331
State Agencies Can Buy from Retailers Outside Bid Process
State agencies can now purchase personal property valued under $15,000 from retailers or vendors within Alabama that are not on the statewide contract or bid list. To be able to purchase off the bid list, the purchase price must be at least 10 percent less than the statewide contract price, and it must be a market price readily available to the public at large. The offer also must conform to the terms and conditions of the statewide contract and the Division of Purchasing must certify that the offer satisfies the criteria before any purchase can be made. Act No. 2014-378
No Locally Mandated Leave Time for State’s Private Employees
Alabama cities and counties now cannot pass laws that would require an employer to grant vacation or other leave time that is not required by state or federal law. Act No. 2014-173
Tobacco Tax Enforcement Overhaul Effective Oct. 1
By Oct. 1, retailers must maintain in their stores 90 days of computer or machine-generated invoices for tobacco products bought from distributors, wholesalers and other sources with the tobacco tax stated separately. After 90 days, the records must be maintained for three years from the date of purchase in a location of their choice. Act No. 2014-262
Catfish Origin Notification As Is
Legislation that would have required restaurants, grocery delis and other food service establishments to notify customers of the country of origin for the entire catfish species order, Siluriformes, on menus died this session. Federal and state law defines catfish as only those fish belonging to the Ictaluridae family, or North American catfish. Anything else advertised or labeled as catfish is considered fraud. Food service establishments already have to post the country of origin of catfish served on either the menu, table tops or a sign in plain view. State officials report no violations of that 2009 law.
Minimum Wage Remains Same
Two bills to create a minimum wage in Alabama never made it out of committee. One would have created an hourly minimum wage of $9.80 by Jan. 1, 2016, while the other called for a $12 state hourly minimum wage. Alabama uses the minimum wage set by federal law.
No Factor Presence Nexus
Legislation that would have established a factor presence nexus standard for business activity for income tax purposes in Alabama died in committee. The legislation would have made Alabama’s standard for establishing substantial nexus different than any other Southern state and the majority of the other U.S. states.
LIKELY TO REAPPEAR
Business License and Workers’ Comp Reform to Return in 2015
The Legislature took a small step this session toward simplifying and streamlining Alabama’s business license system, a tenet of the Alabama Retail Association’s 2014 legislative agenda. Expect major reform legislation for Alabama’s cumbersome and confusing county/state business licensing system to be introduced in 2015.
Although workers’ compensation reform legislation, which had been introduced in 2013, did not reappear this year, a strong possibility exists for such legislation in 2015. Alabama Retail will continue to monitor the progress of any efforts to manage workers’ compensation costs more effectively.
Amount that Qualifies as Small Claims Could Increase in 2015
Legislation to double the amount of claims that can be settled in small claims court, only needed House approval to become law. It would have increased the jurisdiction of the small claims division of Alabama’s district courts to cover all cases in which the amount in controversy is $6,000 or less. The small claims division will continue to oversee controversies involving $3,000 or less until this legislation is passed, perhaps in 2015.
2014 Regular Session Wrap-Up (more detailed session summary)