Getting your Trinity Audio player ready...

By NOAH WORTHAM | Managing Editor

COLUMBIANA – The Shelby County Commission approved a resolution to support the current Simplified Sellers Use Tax program, which has garnered attention in the last several months as several municipalities have expressed their dissatisfaction with its implementation.

During a meeting on Monday, Oct. 13, the Shelby County Commission unanimously approved a resolution fully supporting the current SSUT program and opposing “any legislative efforts to alter the SSUT program in a way that would disrupt its operations or call into question its constitutionality.”

The Simplified Seller Use Tax Remittance Act was enacted in 2015 in order to establish an easy-to-use system for online sellers to collect sales tax on behalf of Alabama consumers. The SSUT program simplifies tax collection by setting the tax for online sales at a flat 8 percent rate for eligible sellers in the program.

This year, the SSUT system has come under scrutiny from several mayors who have argued that the system is causing their municipalities to lose out on tax revenue. The city of Tuscaloosa made news earlier this year by announcing their lawsuit over the system, claiming that it is in invalid and unconstitutional. Since then, the city of Mountain Brook has joined the lawsuit and several municipalities in Shelby County have expressed their dissatisfaction with the system, including Alabaster, Calera and Chelsea.

“When you factor in the amount of money we get from our local sales tax and the amount of money we get from SSUT—and you factor in for things like inflation and growth—the joint pot of money that we’re receiving is not keeping up with where it would be if everything had just stayed the way it was,” Alabaster Finance Director John Haggard said. “We’re getting less money net between the two sources added together than we would have gotten.”

To complicate matters further, the distribution of SSUT funds is advantageous for certain cities that have little to no retail presence. Some municipalities rely on these funds and may have them dedicated toward projects. Columbiana Mayor David Mitchell has been a vocal advocate for how the current system benefits Columbiana.

“So, there are very, very few larger municipalities that are really impacted by (SSUT),” Mitchell said. “Some of these municipalities are even smaller than Columbiana and they’re in much more rural areas, and they would be much more harmed by the changing of the SSUT law than even Columbiana would be.”

Due to the way the SSUT program is currently written through legislation, the 8 percent flat tax applies to all sales regardless of the locality the product or service was delivered to in Alabama.

The tax is divided up with approximately 4 percent given to the state with the remaining approximate 4 percent distributed between local government. The state distributes its earnings with 1 percent for the Education Trust Fund and 3 percent for the General Fund. Counties receive about 1.6 percent of the SSUT earnings and municipalities receive 2.4 percent that is distributed by population.

During the commission meeting, County Manager Chad Scroggins explained the county’s perspective on the issue and recognized the loss of revenue for some municipalities. However, he argued that changing the system would put burden on the online sellers who would have to collect the sales tax for each municipality they deal with.

“The biggest position to the County Commissioners Association is the fact that you open up Pandora’s Box and it can be very, very difficult when that is opened up,” Scroggins said. “The federal lawsuit states that it has to be simplified and then a small vendor that’s in the middle of Nowwheresville, Indiana, for example, that sells things online, for them to have to keep up with the complex tax law changes between thousands and thousands of municipalities takes the simplified piece out of that.”