Friday, April 15, 2016
Bills Seek End to Third-Party Audit Abuse
The Alabama Retail Association and other business groups have told lawmakers about hundreds of complaints from Alabama businesses concerning the treatment endured at the hands of for-profit sales and use tax auditing/collecting firms. Hearing directly from a single “mad and nervous” business owner, however, most resonated with legislators.
Charlie Ferguson shared how a for-profit contract firm subjected his business, Alabama Bolt & Supply Inc., to an audit that dragged on for two years, then assessed the 40-year-old Montgomery company $95,000 in local sales and use taxes. At that point, Ferguson had to hire a lawyer. After two more years and $45,000 in attorney costs, the final assessment: $136.
“It is just not right,” said Ferguson. “How many people is it happening to, and how much is it actually hurting small business?”
During this four-year “fiasco,” Ferguson said he did could not expand his business nor hire any new employees. “There wasn’t any big time spending going on as far as improvements or hiring someone for something we wanted to do. We didn’t do any of that until it became evident that we weren’t going to have to pay. It hurts a lot, when you are facing that kind of money.”
The business owner related this unsettling sequence of events Wednesday to the Senate County and Municipal Government Committee. The Senate committee conducted a public hearing but did not vote on SB335 by Sen. Paul Sanford, R-Huntsville, which would prohibit a municipality from entering into a contract with a private auditing or collecting firm related to local sales and use taxes. It is anticipated the Senate bill will be voted on when the committee next meets.
Ferguson told the same story to the House State Government Committee on March 23. The House companion bill, HB375 by Rep. Paul Lee, R-Dothan, failed to get a favorable report Wednesday from that committee because of confusion over a substitute version of the bill.
“Sometimes, you’ve got to rattle the cage,” Sanford said Wednesday during the public hearing on his bill, which would completely ban local governments from contracting with private audit/collecting firms. “You got our attention,” said a lobbyist with the largest of the private firms that contract with municipalities to audit and collect local sales and use taxes.
Do you have a horror story similar to Ferguson? Then, tell members of the Senate County and Municipal Government and the House State Government committees to protect you and other retailers from private auditor/collector abuse!
Alabama Retail wants to know your stories, too.
Click here to tell us your story.
Please copy Alabama Retail Association’s Alison Hosp on any emails you send to committee members or give her a call at 1-800-239-5423.
TAX ISSUES
House OKs Exempting Video Programming
Services From Rental, Sales and Use Taxes
On a vote of 59-27 Tuesday, the Alabama House approved HB349 by Rep. Ed Henry, R-Hartselle, which would exempt electronically transferred products from rental, sales and use taxes as long as those products aren’t for permanent use and involve continued payment by the purchaser. The bill includes video programming services (such as streaming) — including subscription services, video-on-demand television services and broadcasting services — in the definition of “product transferred electronically.” Purchased software downloaded onto a computer for permanent use would continue to be taxed under the bill. HB349 has not yet been assigned to a Senate committee.
The Alabama Revenue Department last year tried to make rental of on-demand movies, television programs, streaming and other similar programming subject to the state’s rental tax through an administrative rule. The department ultimately withdrew that rule.
Henry said the true purpose of his bill is to clarify taxing such services is a legislative decision. During debate, Speaker Pro Tem Victor Gaston, R-Mobile, agreed that setting tax policy is “a legislative process, not an agency process.”
The Senate companion, SB345, awaits action by the Senate Fiscal Responsibility and Economic Development Committee.
Road and Bridge Fund
Accountability Bill on Governor’s Desk
A proposed increase in gasoline taxes (HB394) hasn’t yet received approval, but the bill that will make sure new revenue coming in for roads and bridges gets spent on the state’s transportation infracture is on the governor’s desk. The House on Tuesday amended and approved SB180 by Sen. Gerald Dial, R-Lineville, and the Senate concurred with the changes, sending the bill to the governor. The Alabama Department of Transportation, counties and municipalities would be required to use funds on road and bridge projects and not on salaries or administrative expenses. The Transportation Department also would be required to announce annual projects and post quarterly progress reports on its website. If the governor signs SB180 into law and the Legislature does not appropriate any new revenue for roads and bridges in the next two years, the accountability bill becomes null and void.
BUSINESS LICENSES
Bills That Modify Business Licensing
for Certain Industries Advance
A bill modifying business license requirements for the home health/hospice/durable medical equipment industry received Senate approval this week, while a bill exempting prescription drug sales from pharmacies’ gross receipts for business license purposes will be in committee next week.
Prescription Drug Exemption from Gross Sales
The Senate Finance and Taxation General Fund Committee next week will consider HB58 by Rep. Ron Johnson, R-Sylacauga, which allows pharmacies to remove prescription drug sales from their gross receipts when calculating the cost of their business license. The Senate Fiscal Responsibility and Economic Development Committee has already approved the Senate companion, SB329 by Sen. Billy Beasley, D-Clayton. It awaits consideration by the full Senate.
Home Health/Hospice/Durable Medical Equipment
The House Health Committee has been assigned SB306 by Sen. Cam Ward, R-Alabaster, which requires qualified home health care or hospice agencies or providers of durable medical equipment, prosthetics, orthotics, or health care supplies to get a municipal or county business license in a municipality only if its headquarters or a branch office are in that municipality or it has $75,000 or more in annual gross receipts in the municipality. The Senate approved the bill Tuesday on a 27-2 vote amid some debate that the concept should be expanded to other businesses.
LEGAL
House Next to Consider
Deceptive Trade Practices Act Clarification
Only the attorney general or a district attorney could file a class action under the Alabama Deceptive Trade Practices Act based on Senate legislation that is ready for consideration by the full House. The House Judiciary Committee on Wednesday amended and approved SB270 by Sen. Phil Williams, R-Rainbow City. Williams has said it was the Legislature’s intent all along for only the AG and DAs to bring such class actions.
A 2015 ruling by the 11th U.S. Circuit Court of Appeals considered the class-action provision of the Alabama law as “procedural and not substantive,” Williams said, adding that his bill makes it clear that “this law is substantive.” Private causes of the action would still exist, Williams said. He said the bill simply makes the state’s law what it was before the court ruling.
Learn more about the court ruling here: Federal ruling opens door for Alabama class actions
Senate Judiciary Panel to Consider
Bill Increasing District Court Jurisdiction
Near the end of a lengthy agenda Wednesday, the Senate Judiciary Committee will consider HB151 by Rep. David Faulkner, R-Birmingham, which would increase the district courts’ jurisdiction to all cases with amounts in controversy of $15,000 or less, and give circuit courts jurisdiction over matters exceeding $15,000. The House approved the bill in late March.
MEDICAID
House Health Allows Medicaid
to Extend RCO Certification Deadline
The House Health Committee on Wednesday voted to extend probationary and full certification for the state’s regional care organizations beyond the Oct. 1 deadline set in the 2013 state law establishing the organizations. Oct. 1 is when the risks associated with Medicaid services is supposed to shift from the state agency to the 11 RCOs established so far. HB530 by Rep. April Weaver, R-Brierfield, leaves it up to the Alabama Medicaid Agency to decide how long the certification extension will last.
A 2017 General Fund budget signed into law last week shorts the Medicaid Agency by $85 million and jeopardizes the RCOs. A joint legislative subcommittee is expected to start meeting soon to discuss how Medicaid moves forward without the full amount it says it needs to operate. The governor also is mulling potential Medicaid cuts.
Next week, the Senate Health and Human Services Committee will consider the Senate companion, SB397 by Sen. Greg Reed, R-Jasper. Reed was one of the authors of the law that created the RCOs.
HEALTH
Senate Approves Bill Granting Anti-Trust
Liability Immunity to Pharmacy Board
The Alabama Board of Pharmacy and its members would have liability immunity for adopting pharmacy rules that prioritize “patient safety and wellness but may be anti-competitive,” under legislation the Alabama Senate approved Tuesday on a vote of 27-2. SB310 by Sen. Billy Beasley, D-Clayton, now goes to the House Health Committee for consideration.
Beasley’s bill doesn’t lessen or expand the rights and privileges of those governed by the pharmacy board nor does it lessen or expand the pharmacy board members duties “in any context outside of federal or state antitrust immunity” beyond what existed prior to the Feb. 25, 2015, U.S. Supreme Court ruling in the N.C. State Board of Dental Examiners v. Federal Trade Commission case. That ruling held that professional licensing boards don’t automatically get antitrust immunity. In the 6-3 ruling, the nation’s highest court found that the dental examiners board, which was made up primarily of dentists, could not exclude non-dentists from the market for teeth whitening services.
The Senate amended SB310 to require the board to document the public safety and wellness of any anti-competitive rule.
The House companion, HB320 by Rep. Ron Johnson, R-Sylacauga, awaits consideration by the full House.
Senate Bill Outlawing Sale
of Adjustable Focus Eyewear on Way to Full House
The House Health Committee on Wednesday approved SB245 by Sen. Jim McClendon, R-Springville, which seeks to halt the sale of adjustable focus eyewear in Alabama. The bill now goes to the full House for consideration.
The legislation sets lens requirements for over-the-counter eyewear that would preclude the sale of glasses with an adjustable magnification, a technology being marketed worldwide by Adlens. McClendon, a retired optometrist and past president of the Alabama Optometric Association, says this new technology does not meet the standards of acceptable vision correction needed in Alabama, especially for driving. The bill also increases the magnification allowed in over-the-counter eyewear to 3.50 diopters, the unit of measurement for optical power. The companion legislation, HB336 by Rep. April Weaver, R-Brierfield, also awaits action by the full House.
Pittman Proposes System to Replace Medical Malpractice
Sen. Trip Pittman, R-Daphne, this week introduced SB413, which would create a patient compensation system under the Alabama Department of Public Health for the recovery of damages related to medical injuries. The system would replace civil medical malpractice litigation with a fee schedule system similar to workers’ compensation. The bill has been assigned to the Senate Health and Human Services Committee.
ALCOHOL
Three-Bill Package to Allow Limited
Retail Sales for Alcohol Makers Now Law
Bills that allow greater retail opportunities for Alabama distilleries and wineries are now law joining a similar bill for breweries/brewpubs that became law last month. All three bills were recommended by the Alabama Alcoholic Beverage Study Commission.
The governor signed the spirits and wine bills into law Monday. Starting July 1,:
- distilleries can sell a standard-size bottle (up to 750 milliliters) per customer, per day from its premises for off-premise consumption only, under Act No. 2016-130 by Sen. Bobby Singleton, D-Greensboro. The House companion was HB46 by Rep. Alan Boothe, R-Troy.
- a licensed winery that produces less than 50,000 gallons of table wine annually can operate one additional tasting room outside its on-site tasting room from which it can sell one case of wine, per customer, per day. Act No. 2016-131 by Sen. Linda Coleman-Madison, D-Birmingham, The House companion was HB83 by Rep. David Faulkner, R-Birmingham, and Rep. Alan Harper, R-Aliceville.
Panel OKs Piedmont Sunday Sales;
Hokes Bluff, Glencoe Bills Introduced
The House Local Legislation Committee on Wednesday approved HB469 by Rep. Richard J. Lindsey, D-Centre, which would allow the Piedmont City Council to allow Sunday alcohol sales in that Calhoun County town. It now is ready for consideration by the full House.
Rep. Becky Nordgren, R-Gadsden, this week introduced legislation that authorizes the Hokes Bluff City Council to call a refendum on whether to allow Sunday sales in that Etowah County city. HB525 has been assigned to the House Local Legislation Committee.
Rep. Mack Butler, R-Rainbow City, this week introduced legislation that would allow the Glencoe City Council, by resolution, to call a Sunday alcohol sales referendum. HB544 has been assigned to the House Local Legislation Committee.
NEXT LEGISLATIVE DAY
The Alabama House of Representatives will convene at 1:30 p.m. Tuesday, April 19, for the 23rd legislative day of the Alabama Legislature’s 2016 regular session. The Alabama Senate convenes at 2 p.m.
FEDERAL
Continue to Speak Out on Overtime Rule
National retailers and a coalition of businesses, nonprofits and educational institutions met with Office of Management and Budget (OMB) officials and sent a letter to Congress this week asking them to rethink the administration’s proposal to expand overtime.
Federal legislation also has been introduced to press pause on the rule’s progress.
H.R. 4773 by Rep. Tim Walberg, R-Mich., and S. 2707 by U.S. Sen. Tim Scott, R-S.C., the Protecting Workplace Advancement and Opportunity Act, would require the U.S. Labor Department to perform a detailed impact analysis prior to implementing changes to the white-collar exemptions under the Fair Labor Standard Act’s overtime pay requirements.
Currently, a person must satisfy three criteria to qualify as exempt from federal overtime pay requirements: first, they must be paid on a salaried basis; second, that salary must be more than $455/week ($23,660 annually); and third, their “primary duties” must be consistent with managerial, professional or administrative positions as defined by DOL.
The proposed rule adds some 5 million people nationally to those eligible for time-and-a-half pay for working more than 40 hours a week by increasing the minimum salary necessary for employees to qualify for an overtime exemption to $970 weekly, or $50,440 annually.
You still have time to weigh in on the rule to OMB and Congress. The link below takes you to a single form that allows you to comment to Alabama’s senators, your representative and OMB Regulatory Affairs Administrator Howard Shelanski:
Express Your Concerns to Congress and OMB here
As part of this week’s efforts to keep the pressure on, the National Retail Federation, the Partnership to Protect Workplace Opportunity and a camera crew visited Alabama Retail board member Terry Shea at the Hoover location of Wrapsody, the business Shea co-owns. The rule as written “puts more pressure on our little business. It is one more thing that keep us from the being the good boss we already are,” Shea said. Shea also testified in October before the House Small Business Committee on behalf of all retailers.
