Small vendors may not have to pay sales tax deposit for events

Published 9:10 pm Monday, October 28, 2013

By KATIE MCDOWELL/Managing Editor

ALABASTER – Small vendors at one-day events in the city of Alabaster likely will not have to pay a sales tax deposit, city officials said during an Oct. 28 work session.

City council members discussed the city’s proposed one-day event license ordinance, which was introduced at a recent council meeting. Currently, the city requires businesses or vendors to pay a $100 one-day business license, if they are not already licensed. The fee is typically waived for events.

“We proposed (the ordinance) because the city hosts about 10 events a year,” City Administrator George Henry said. “Every time we were going to the council to have them waive the $100.”

The original proposal required businesses to pay a deposit determined by anticipated sales, and vendors with anticipated sales of up to $2,500 would pay a deposit of $50. Henry said the council used the city’s Fall Fest on Oct. 26 to receive feedback about the proposed ordinance.

Some small vendors at Fall Fest, most selling arts and crafts or homemade items, reported earning $25-$100 during the day and expressed concerns about the proposed deposit. Vendors are also required to pay a 4 percent sales tax to the city.

Henry said the ordinance is not meant to be “punitive or onerous,” and the city does not want the deposits to prevent small arts and crafts vendors from participating.

“It definitely makes for better events when we can have (that) participation,” he said.

The council discussed amended sales tax deposits during the meeting:

• $1,000 and under, deposit is $0

• $1,001-$2,500, deposit is $50

• $2,501-$5,000, deposit is $100

• $5,001-$10,000, deposit is $200

• $10,001 and above, deposit is $400.

Henry said the proposed deposits are meant to make sure the process is fair for all vendors, both big and small. It’s also meant to get the names of all vendors in the city’s system for sales tax compliance purposes.

“The whole point of this was to get them in the system and to follow up with them,” he said.

Henry said the amount of money raised from the proposed sales tax deposits likely would be less than $10,000 over the course of the year.

The council will vote on the proposal during its next regular meeting on Monday, Nov. 4.