Refinement of voluntary tax remittance from online-only sellers is on governor’s desk

Legislation that would alter the way the state collects taxes from out-of-state, online-only and other remote sellers is on the governor’s desk.

Late Tuesday, March 14, the Alabama House gave final approval to the changes requested by the Alabama Revenue Department. SB86 by Sen. Trip Pittman, R-Daphne, arrived on the governor’s desk by the next day. The companion bill was HB83 by Rep. Rod Scott, D-Fairfield.

Scott told House members that the legislation “improves” The Simplified Seller Use Tax Remittance Act, which was enacted in 2015 and amended in 2016. That law has generated almost $20 million in new tax revenue so far this budget year and is expected to jump to $40 million by the end of the year, Revenue Commissioner Julie Magee says. In the 2016 fiscal year, the law brought in $4.3 million.

The legislation would:

  • Allow the Revenue Department to make monthly, rather than quarterly distributions to local governments. “We have collected $6.3 million for local entities that can’t be distributed until April under the current law,” Mike Gamble, a deputy revenue commissioner, said.
  • Allow the department to disclose the names of remote sellers participating in the simplified seller program. Magee says 92 retailers are participating, but the only known participant is Amazon. Gamble said disclosure of those participating will let local governments know not to consider an audit of those companies as they are already remitting taxes.
  • Remove the requirement that a participant in the simplified seller program participate for at least six months before establishing a physical presence in the state. This will allow those planning to establish a distribution center or a store in the state to immediately begin to collect through the simplified sellers program, Gamble said. Those establishing Alabama distribution centers can continue to participate in the simplified sellers program as long as they don’t have a retail presence in the state, he said. Once the seller has a retail presence in the state, they are no longer eligible for the simplified seller program or its flat, 8 percent tax rate.

If the governor signs these changes into law, they would be effective July 1, 2017.

Learn more about The Simplified Seller Use Tax Remittance Act

 

This article is part of the Alabama Retail Report, a communication for Alabama Retail Association members. Not a member? Join us!

Reprints or republishing are welcomed but require permission. Contact us for permission.