Taxpayer Fairness Act of 2014

Alabama has become the 32nd state with an independent tax appeals process, Gov. Robert Bentley said in a ceremonial bill signing Wednesday, March 19, of HB105 by Rep. Paul DeMarco, R-Homewood, and Sen. Bryan Taylor, R-Prattville. The bill actually became law Monday, March 10.

TaxpayerFairnessActSigningThe new law (Act No. 2014-46) creates the Alabama Tax Tribunal, consisting of at least one, but no more than three judges. The tribunal will be in place by Oct. 1. Gov. Robert Bentley appointed Bill Thompson as the tribunal’s chief judge.

The governor described the newly created entity as an “impartial forum for taxpayers to challenge tax assessments. It separates the adjudicator from the collector,” he said.

DeMarco, the primary sponsor for the past four years, praised the legislation for its economic development aspect. “It creates a fair process and other states can’t use our process against us” when competing against Alabama for economic development projects, he said.

“If you have a tax dispute in Alabama, you will get a fair shake,” said Taylor, who assumed the bill sponsorship after former Sen. Ben Brooks, R-Mobile, left the Alabama Legislature to become a circuit judge.

The Business Associations’ Tax Coalition (BATC), a coalition of 27 business trade associations, chaired by Alabama Retail Association President Rick Brown, has advocated for an independent tax appeals process for at least 15 years and is elated to see the new process put into action.

The new law:

  • Abolishes the current Administrative Law Division of the Alabama Department of Revenue.
  • Transfers the personnel and equipment from the abolished division to the newly created Alabama Tax Tribunal.
  • Allows taxpayers to appeal final assessments of sales, use, rental, and lodgings taxes issued by self-administered cities and counties (and their private auditing firms) to the tribunal, unless the governing body of the city or county opts out. This provision works hand-in-hand with the Optional Network Election for Single Point Online Transactions, or ONE SPOT, e-filing program for local sales, use, and rental taxes.
  • Starts the 30-day time period for filing appeals of preliminary or final assessments at the date of the actual mailing to the taxpayer, or date of personal service, whichever occurred earlier. Previously, the appeals clock started at the date of entry.
  • Broadens the “innocent spouse” relief for paying tax, interest and penalties if your spouse (or former spouse) improperly reported items or omitted items on your tax return, which is consistent with federal changes. A bill passed in 2012 only partially conformed to the pro-taxpayer federal changes.
  • Increases the power of the Taxpayer Advocate, allowing the advocate to correct a final order issued by the tribunal if newly discovered evidence shows a taxpayer was incorrectly assessed.
  • Waives the bond requirement or payment of the disputed tax before filing an appeal for taxpayers with a net worth of less than $250,000 or less in cases where an assessment is appealed directly to circuit court or from the tribunal to a circuit court.
  • Makes no increases to existing penalties.

More detailed explanation of the new law