Alabama Legislature Passes Landmark Legislation on Single Point of Filing for Businesses

State & Local Tax Alert: Alabama Edition


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At the urging of the Alabama Retail Association (“ARA”) and other business groups, as well as House and Senate leadership, on Tuesday night, the Alabama House of Representatives unanimously passed S.B. 459, commonly referred to as the “ONE SPOT” bill, with a vote of 93-0. The Senate passed the bill on April 10 with a vote of 27-1. The bill will now be sent back to the Senate to concur with certain technical amendments made by the House and then on to Governor Robert Bentley, who is expected to sign it.

ONE SPOT stands for “Optional Network Election for Single Point Online Transactions.” Under this bill, businesses will have the option to file all of their sales, use, and rental tax returns and make the accompanying payments online, since all local taxing jurisdictions will be required to use the ONE SPOT system. To ensure that the local taxing jurisdictions have meaningful input into the process, however, the bill calls for a state and local advisory committee to be established and give recommendations to the Alabama Department of Revenue (the “Department”) on the system’s implementation.

Both the business community and the Department strongly supported this bill, which will significantly reduce the administrative burden on businesses with locations or other physical presence in multiple cities and counties within the state. Under current Alabama law, businesses located in or otherwise having nexus with multiple cities and counties must file separate sales, use, and rental tax returns for each individual location unless those cities or counties are administered by the Department or by one particular contract auditing firm. Alabama is unique among the 50 states by allowing each city and county to make the election to self-administer its sales, use, and rental taxes. While most of the smaller municipalities and counties have engaged the Department or, more often, a contract auditing firm to handle their tax collection and administration, some of the larger municipalities and a handful of counties long ago opted to administer their own sales, use, and rental taxes, making Alabama the poster child for the movement to streamline sales tax.

Alabama retailers are especially pleased that Alabama’s sales, use, and rental tax filing system will soon be streamlined. Indeed, Alison Wingate, Vice President of the ARA, said that “a single point of collection for Alabama's retailers has been an ARA goal for many years, and our members are ecstatic to see it actually happen." The ARA extended its gratitude to sponsors Sen. Slade Blackwell (R-Birmingham) and Rep. Jack Williams (R-Birmingham) for their willingness to tackle this issue and their unrelenting work to see it through the process. ARA’s President, Rick Brown, gave special thanks to Senate President Pro Tem Del Marsh (R-Anniston) and House Speaker Mike Hubbard (R-Auburn) for “recognizing the insanity of Alabama's sales tax collection system and proposing legislation to remedy the situation” and thanked Governor Bentley and Alabama Revenue Commissioner Julie Magee for their leadership.

Governor Bentley said the “best news” about the bill is that the service will be “free of charge for businesses and local jurisdictions.” The Governor also sees the bill as a more efficient, streamlined approach, and one that will allow Alabama to be “even more open for business and future economic development.” The bill was the top recommendation of the Business Tax and Regulatory Reform Study Group recently established by Sen. Marsh, who said, “This common sense solution is a perfect example of how we can streamline state government and eliminate bureaucratic red tape to better serve Alabama taxpayers.” Bruce Ely served as Technical Adviser to the task force.

The system must be in place no later than September 30, 2013.