Friday, March 7, 2014
Independent Tax Appeals Bill
on Governor’s Desk
Legislation that would centralize Alabama’s tax appeal process and make that process independent of taxing authorities awaits the governor’s signature to become law.
On Tuesday, the Alabama House voted 94-1 to concur with Senate changes made to HB105, the Taxpayer Fairness Act, formerly known as the Alabama Taxpayers’ Bill of Rights II. Rep. Paul DeMarco, R-Homewood, the bill’s original author, told senators, “I’m satisfied this gets us to where we need to be.”
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 years. “The judge who decides your fate shouldn’t be an employee of the taxing authority you disagree with,” said Brown.
The bill:
- Abolishes the current Administrative Law Division of the Alabama Department of Revenue.
- Creates the Alabama Tax Tribunal by Oct. 1. The chief judge is to be appointed by July 1.
- 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.
- 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. The current appeals clock starts 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.
- Makes no increases to existing penalties.
>> Read a more detailed summary of the bill
The Senate companion was SB74 by Sen. Bryan Taylor, R-Prattville.
LABELING
Senate Panel Adopts Catfish Origin Notification
Expansion Substitute; Drops Menu-Only Requirement
Wednesday, the Senate Agriculture, Conservation and Forestry Committee adopted a substitute version of SB335 by Sen. Bobby Singleton (pictured), D-Greensboro, which would require restaurants, grocery delis and other food service establishments to notify customers of the country of origin for the entire catfish species order, Siluriformes. The substitute removes an Alabama Retail Association opposed requirement that limited that notification to printed menus only. The bill had been on the Senate’s Thursday calendar, but the upper chamber adjourned before getting to the bill.
The substitute retains the current option for notifying customers of the country of origin via a sign or table top display. Had it remained as originally proposed, the legislation would have caused restaurants to constantly reprint menus, while forcing grocery delis and other small food vendors, which generally advertise their daily fare on chalk or white boards, to print menus in order to comply.
Current law at both the federal and state level define catfish as only those fish belonging to the Ictaluridae family, which is the North American family of catfish. Anything else advertised or labeled as catfish is considered fraud. Since Alabama’s law was enacted in 2009, the Alabama Department of Public Health said there have been no violations of the law.
This legislation would broaden the notification process to the entire order of catfishes, which adds 35 additional families of catfish to those about which food establishments would have to communicate country of origin with their customers. Among the types of fish that would fall under this bill would be the Pangasius family, which includes basa, tra and swai. Under current law, those types of fish cannot be advertised or listed on menus as catfish. The bill is being pushed by the state’s catfish producers.
>> Current Alabama catfish and seafood labeling notification rules
The companion legislation, HB432 by Rep. A.J. McCampbell, D-Livingston, awaits action by the House Agriculture and Forestry Committee.
Posters and requirements related to catfish labeling and notification can be found under Regulations in the Advocacy section at alabamaretail.org.
ON THE GOVERNOR’S DESK
Limited Liability Reform on Governor’s Desk
On a vote of 98-0 Tuesday, the Alabama House of Representatives concurred with the Senate changes to HB2, or the Uniform Alabama Limited Liability Company Law, by Rep. Paul DeMarco, R-Homewood. Demarco said the bill, which replaces the current limited liability company law, will mean “more Alabama businesses will create their LLCs in Alabama.” The Alabama Senate approved the bill Feb. 27 on a vote of 25-0. The bill now goes to the governor for his signature.
The state’s limited liability law, which governs 70 percent of all businesses in the state, hasn’t been updated since 1994, DeMarco said earlier. The 140-page bill, drawn up by the Alabama Law Institute, focuses on the contractual nature of LLCs. Under the bill, the implied contractual covenant of good faith and fair dealing cannot be eliminated. The bill also acknowledges that LLCs don’t necessarily have to be for-profit businesses. The Senate companion was SB3 by Sen. Rodger M. Smitherman, D-Birmingham.
The effective date is Jan. 1, 2015.
Senate Sends Governor Bill Banning Cities, Counties
from Mandating Leave Time for Private Employees
On a vote of 29-0 Thursday, the Alabama Senate gave final approval to HB360 by Rep. Jack Williams, R-Birmingham, which prohibits cities and counties from passing laws that would require an employer to grant vacation or other leave time that isn’t required by state or federal law. The House approved the bill 84-9 on Feb. 18. The bill now goes to the governor for his signature.
Sen. Rusty Glover, R-Semmes, author of the Senate companion, SB313, told senators the bill is intended to head off an issue that has emerged in localities in other states.
Bill to Align Alabama’s Cork-and-Go Law
with Federal Law on Governor’s Desk
On a vote of 88-1 Wednesday, the House gave final approval to SB56 by Sen. Paul Sanford, R-Huntsville, which requires restaurant patrons who don’t finish their wine to transport their recorked or resealed bottles where the vehicle driver can’t reach it. The bill is on the governor’s desk awaiting his signature to become law.
The legislation amends a 2012 law, which allows Alabama restaurant patrons to put the cork back in an unfinished bottle of wine and take it home. The 2012 law permits only one opened bottle of wine to be carried out of a properly licensed establishment, if the bottle has been recorked and resealed in a bag. Alabama and 31 other states must pass legislation that requires unfinished wine to be locked away to reflect federal standards so the states can continue to receive federal transportation money.
Sanfords’ bill amends the law to specify that the bottle must be placed in a locked trunk; in a storage or luggage compartment; in a locked glove compartment; in a storage or cargo compartment in the bed of a pickup truck or in a locked case not readily accessible behind the front seat of a pickup truck; or in the area behind the last upright seat of any vehicle that does not have a trunk. The law will continue to require the seller to provide the customer with a dated receipt for the resealed wine bottle.
Once signed into law, it would be effective immediately.
The companion bill was HB81 by Rep. Terri Collins, R-Decatur. Collins and Sanford also sponsored the 2012 law.
Goodwater Sunday Sales on Governor’s Desk
On a 36-0 vote Wednesday, the Alabama House gave final approval to SB307 by Sen. Jerry Fielding, D-Sylacauga, which would allow the voters in the city of Goodwater in Coosa County to vote on the Sunday sales of alcoholic beverages. Residents would be allowed to vote whether to allow alcoholic beverage sales between 1 and 9:30 p.m. Sundays.
The Alabama Senate had approved the bill on a 21-0 vote Feb. 11, and the House Local Legislation Committee approved the bill Wednesday. It now goes to the governor for his signature.
TAXES AND FEES
Senate Panel OKs Expanding
Back-to-School Sales Tax Holiday
On a vote of 6-3 Wednesday, the Senate Finance and Taxation General Fund Committee amended and approved SB382 by Sen. Bryan Taylor, R-Prattville, which expands the state’s annual back-to-school sales tax holiday to include certain uniforms and musical instruments as well as clarifying that the tax holiday applies to e-readers and tablets. The committee amended the bill to remove school affiliation language in regards to musical instruments, thus extending the tax-free benefits to all Alabamians. The current law does not specify that purchasers have to be students or parents of students. The bill now moves to the full Senate.
Under the legislation, the items that are exempt from state sales tax during the three-day August tax holiday would be expanded to include:
- up to $150 of the cost of band, cheerleading, dance team and other school-related activity uniforms. Sports uniforms would continue to be taxed.
- the first $750 of the cost of musical instruments used for musical instruction, music classes or other music groups. While instruments can cost thousands of dollars, the House sponsor has said the $750 equals the current value of computers allowed to be tax free during the weekend. Like the computer provision, the instrument exemption would apply to a single purchase.
Current law gives shoppers the opportunity to purchase certain school supplies, computers, books and clothing free of the state’s four percent sales or use tax.
The proposed legislation spells out specifically that the computer provision of the law applies to tablets and e-readers capable of downloading or viewing school instructional or classroom research documents.
Alabama’s ninth annual sales tax holiday for school-related items begins at 12:01 a.m. Friday, Aug. 1, and ends at midnight Sunday Aug. 3.
The House companion, HB521 by Rep. Randy Davis, R-Daphne, was on the House calendar Wednesday but did not reach a vote. In the House version, the House Ways and Means Education Committee earlier deleted a provision that would have expanded the computer exemption to “other devices.” Current law governing the sales tax holiday excludes cell phones from the definition of a computer. The House bill also does not include a provision for other school-related activity uniforms.
Meanwhile this week, Rep. Becky Nordgen, R-Gadsden, introduced HB559, which would create a sales tax holiday for guns, ammunition and firearms supplies. The bill proposes the firearm sales tax holiday for the Friday through Sunday prior to July 4 each year with no limits on the amount of purchases. Louisiana is the only state with a sales tax holiday for firearms. The Louisiana holiday, which is geared to hunters, has been held in early September each year since 2009.
House OKs Tax-Free Medical Equipment Rental
On a vote of 86-0 Thursday, the Alabama House approved a substitute version of HB280 by Rep. Ron Johnson, R-Sylacauga, which would make the rental or leasing of durable, prescribed medical equipment, prosthetics and orthotics devices, and medical supplies billed to Medicare, Medicaid, or a health benefit plan, exempt from all sales, use and rental taxes. It would have an effective date of Aug. 1. The Senate Health Committee will consider the bill at its Wednesday meeting.
Scott Introduces Factor Presence Nexus Bill
Rep. Rod Scott, D-Fairfield, has introduced legislation to establish a factor presence nexus standard for business activity for income tax purposes. Under HB548, out-of-state businesses doing business in Alabama would be considered to have “substantial nexus” and subject to Alabama income tax, if their business activity in Alabama surpassed any of the following thresholds:
- $50,000 of property.
- $50,000 of payroll.
- $500,000 of sales.
- 25 percent of total property, total payroll and total sales.
The bill has been assigned to the House Ways and Means Education Committee.
LEGAL
Senate OKs Bill Increasing
What Qualifies as Small Claims
On a vote of 31-0 Thursday, the Alabama Senate approved legislation that doubles the amount of claims that can be settled in small claims court. The bill now will be considered by a House committee.
SB170 by Sens. Jerry Fielding, R-Sylacauga, and Del Marsh, R-Anniston, increases 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. Filing fees would remain the same under the bill. District courts currently have jurisdiction over cases involving $10,000 or less, while the small claims division oversees controversies involving $3,000 or less.
Fielding said it has been 18 years since the level considered small claims has been altered.
Sen. Phil Williams, R-Rainbow City, told senators it costs small businesses more to pursue certain debts than the debt itself. “This will free them up to do more,” Williams said.
BAD CHECKS
Senate Votes to Extend
Bad Check Law to Electronic Versions
Thursday, the Alabama Senate on a vote of 28-1 approved SB339 by Sen. Scott Beason, R-Gardendale, which would make electronic drafts negotiable instruments. On Tuesday, the Alabama House is expected to take up its version of the bill, HB450 by Rep. Mike Hill, R-Columbiana.
Under both bills, electronic drafts are considered negotiable solely as it relates to the state’s law governing negotiating a worthless instrument. Under existing law, a person commits the crime of negotiating a worthless negotiable instrument if he or she presents a check or promissory note as payment, knowing or intending that it will not be honored by the drawee. The legislation extends that crime to electronic drafts made in bad faith. It also extends the same punishment and other related legal matters to bad electronic drafts.
CREDIT
Bill Seeks to Protect Credit Info
for Minors, Incapacitated
The House Financial Services Committee on Wednesday approved a substitute version of HB541 by Rep. Jack Williams, R-Birmingham, which would allow a representative to place a security freeze on the consumer credit information for a minor younger than 16, an incapacitated individual, or for someone whom a court has appointed a guardian or conservator. The bill now goes to the full House.
FOOD DONATIONS
Senate Judy Votes to Extend
Immunity to Restaurant Donated Food
Wednesday, the Senate Judiciary Committee amended and approved SB298 by Sen. Rusty Glover, R-Semmes, which clarifies that the limited criminal and civil immunity now afforded to donors of canned or perishable food to charitable organizations applies to food prepared at a restaurant or permitted food service establishment. The bill now goes to the full Senate.
The amendment requires food donors to advise the charitable organization if the donated items contain major food allergens as defined in the Food Allergen Labeling and Consumer Protection Act of 2004. It also requires the charitable organization to segregate foods with known allergens and list the known allergens on a notice to those who will consume the products.
TOBACCO
Senate Panel Amends, Approves
Overhaul of Tobacco Tax Enforcement
The Alabama Senate can now consider either the Senate or House versions of legislation that requires retailers to maintain 90 days of computer and machine-generated invoices for tobacco products the stores buy with the tobacco tax stated separately. The Senate Finance and Taxation General Fund Committee on Wednesday amended and approved SB401 by Sen. Bill Hightower, R-Mobile. After 90 days, the records must be maintained for three years from the date of purchase but they don’t have to be kept at the store itself, under this legislation. The Alabama House approved the companion bill, HB404, on a vote of 98-0 Feb. 20. It also is ready for consideration by the full Senate.
Hightower told the committee the legislation is meant to keep “illegal contraband” out of Alabama and “tightens up auditing for retailers.”
The legislation:
- redefines wholesale dealers and jobbers and adds a definition for semi-jobbers.
- makes retailers of semi-jobbers who refuse to provide a duplicate invoice to the Revenue Department subject to a $1,000 to $5,000 department-imposed penalty that is multiplied by the sum of the violation added to any prior violations.
- removes archaic language regarding stamps on tobacco products.
- makes handwritten invoices from tobacco wholesalers invalid documents as proof of sale.
- sets out penalties, including confiscation of tobacco, for failure to maintain records.
- adds a definition for cigars, cheroots and stogies.
- creates a website listing of permitted and registered tobacco distributors.
Retailers would have until Oct. 1 of this year to gear up for this change should the bill become law.
ALCOHOL
Liquor Tastings at State Stores Fails in Senate;
Reconsidered, Carried Over
The Alabama Senate on a vote of 14-17 Thursday at first defeated SB350 by Sen. Billy Beasley, D-Clayton, which would allow licensed liquor manufacturers or representatives to conduct liquor and wine tastings, at no charge to consumers, in state liquor stores. Later on a voice vote, the upper chamber voted to reconsider the bill and then carried it over, thus reviving it for possible debate later.
Sen. Bill Holtzclaw, R-Madison, tried to amend the bill to include retail licensees, so as “not to create a state-run advantage over mom and pops,” but his amendment failed 7-16.
Under this legislation, tasting servings would be restricted to one-quarter ounce of liquor with no more than two products or one ounce of wine with no more than four products at any tasting, no more than one tasting a day, no more than two servings per customer and liquor could not be sold for on-premises consumption during a tasting.
Senate Panel OKs Bill to Allow Certain Manufacturers
to Sell Alcohol Directly to Consumers
On a 4-2 vote Thursday, the Senate Job Creation and Economic Development Committee amended and approved SB439 by Sen. Dick Brewbaker, R-Montgomery, which would allow larger alcohol manufacturers and breweries to operate a restaurant and sell alcoholic beverages on or adjacent to its premises. It also would allow certain alcoholic beverage manufacturers to buy their own product through a wholesaler and sell it for off-premise consumption.
Under this legislation, alcoholic beverage manufacturers that produce 25,000 barrels of alcohol or more annually would be able to sell their product to consumers at a restaurant at their plant. According to the Alabama Brewers Guild, no existing Alabama breweries manufacture that volume of product.
The committee amendment limits the manufacturer to operating a restaurant and selling alcohol to consumers at that restaurant. The bill now moves to the full Senate for consideration. Rep. April Weaver, R-Brierfield, introduced a companion bill Wednesday, HB581. It awaits action by the House Economic Development and Tourism Committee.
Panel OKs Bill Allowing Entertainment Districts
in Smaller Cities in Same County with a Larger City
On Wednesday, the House Economic Development and Tourism Committees approved HB514 by Rep. Jack Williams, R-Birmingham, which would allow Class 6, 7 and 8 municipalities located in a county with a Class 1 municipality to have three entertainment districts within their corporate limits.
On Feb. 4, the same committee carried over HB171, also by Williams, R-Birmingham, which would have allowed Class 6, 7 and 8 municipalities to establish entertainment districts where patrons can walk from establishment to establishment with open containers. That bill would have allowed one half-mile-by-half-mile entertainment district in those cities as long as the district had at least four establishments with retail liquor licenses within its boundaries.
>> Easy reference for determining
which cities are Classes 1, 6, 7 and 8
UNEMPLOYMENT
House to Consider Unemployment Benefits
Bill Dealing with Pensions
Only 100-percent-employer-financed pensions would disqualify someone from receiving unemployment benefits, under HB405 by Rep. Kurt Wallace, R-Maplesville, which is the final bill on the House’s calendar to consider Tuesday. Any pension payments retroactively awarded to an individual would constitute disqualification and require recovery of any unemployment benefits paid during the disqualification period, only if the worker did not contribute anything to the pension fund.
NEXT LEGISLATIVE DAY
Tuesday, March 11, will be the 23rd legislative day of the Alabama Legislature’s 2014 regular session. Only eight legislative days remain in this session. The Alabama House of Representatives will meet at 1 p.m. The Senate convenes at 2 p.m.
FEDERAL
E-Fairness Hearing Rescheduled for Wednesday
An e-fairness hearing originally scheduled for this week had to be delayed until next week due to a winter storm.
The U.S. House Judiciary Committee reset its hearing to explore “alternate solutions on the Internet sales tax issue” for 9 a.m. CST (10 a.m. EST) Wednesday.
The hearing officially sets the ball in motion for the House to come up with its own version of marketplace fairness legislation and bring that legislation to a vote. Last year, the committee released its basic principles for leveling the playing field for all sellers related to sales tax collection.
The U.S. Senate passed a Marketplace Fairness Act last year, which exempted businesses with less than $1 million in annual online revenue. Alabama U.S. Rep. Spencer Bachus, R-Vestavia Hills, who sits on the Judiciary Committee and is chairman of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, however, is working on a version that may not include a small business exemption. Online sales tax collection should be so simple and inexpensive that small businesses do not need an exemption, according to the committee’s principles.
The current system, which allows sellers without a brick-and-mortar store or other presence in a state to avoid sales tax collections, puts all retailers who do have stores in a state at an immediate disadvantage, as much as a 10 percent disadvantage in some parts of Alabama. Small brick-and-mortar retailers feel that disadvantage most keenly.
Conservative economist Arthur Laffer this week wrote an editorial supporting e-fairness, explaining the economic benefits of closing online sales tax loophole and summarizing the progress state leaders are taking to lower taxes once Congress passes e-fairness legislation. Last year, Laffer released a report that said the potential economic growth in Alabama by 2022 if the Marketplace Fairness Act passes would be $6.8 billion in additional gross domestic product and 21,732 new jobs.
Thank you if you were among the more than 1,000 small retailers who added their names to a letter to U.S. House Judiciary Chairman Bob Goodlatte calling on him to pass e-fairness legislation.
