Bradley attorney Bruce P. Ely was featured in an ABC 33/40 interview discussing COVID-19’s impact on occupational tax. Due to remote work during the pandemic, many are questioning whether they will be refunded tax charges deducted from employer paychecks. Cities charging occupational taxes include Birmingham, Bessemer, Gadsden, Irondale and Leeds.
Ely said occupational tax is “designed in many cities across the United States to cover the cost of employees who travel into the city, work there and then go back home.”
Different cities have different policies about whether to issue refunds. Birmingham is not providing refunds. Ely disagrees with this stance.
“If you read the ordinance itself, it says you have to work within the city, the city limits of Birmingham,” he said. “I think the employee is entitled to a refund but they’ve got to prove it, and two they’ve got to convince their employer to jointly sign a refund claim.”
Last year, Birmingham collected $98,340,000 from its occupational tax.
“I think there’s a lot of money involved,” said Ely. “And the city of Birmingham is on a tight budget right now, I think that’s part of it. They could be subject to thousands of refund claims. Where Irondale the scope of the refund issue is so much smaller. I think that’s part of it. I think Irondale’s doing the right thing.”
Ely hasn’t seen any litigation about this but believes it will come.
“I think it’s a winnable case,” he said. “I think a lot of employers are waiting for someone else to file suit on the refund claim and ride their coattails. As we’ve seen in other cities, I think we’ll eventually see some litigation on this issue.”
The original interview, "Will cities offer occupational tax refunds for employees working from home due to COVID?” appeared on ABC 33/40 on July 12, 2021.