At the urging of the Alabama Retail Association and other business groups, and well as the House and Senate leadership and their respective task forces, the Alabama Legislature passed and Governor Robert Bentley on Thursday, May 3, signed into law Senate Bill 459, which many believe will greatly reduce the paperwork and sales tax filing burden for many companies doing business in Alabama. Municipalities and counties and their respective associations are hoping for increased levels of compliance. As we previously reported, the 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.
Commenting on the bill, Governor Bentley said that “Alabamians expect government to make efficient use of their hard-earned taxpayer dollars.” “With the ONE SPOT system, the Alabama Department of Revenue can offer businesses an efficient process that eases the burdens associated with tax filings in multiple taxing jurisdictions. This service is free of charge for businesses and local jurisdictions. I commend the Legislature for streamlining this process and making our state even more business friendly.”
ONE SPOT stands for “Optional Network Election for Single Point Online Transactions.” Under the new act, businesses will have the option to file all of their sales, use and rental (lease) tax returns and make the accompanying payments, online, and 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 act calls for a state and local advisory committee to be established and give recommendations to the Alabama Department of Revenue (“ADOR”) on the system’s implementation.
The long awaited legislation is designed to 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 ADOR or by one particular contract auditing firm. Alabama is unique among the 50 states by allowing each city and county to elect to administer its own sales, use, and rental tax levies. While most of the smaller municipalities and counties have engaged the ADOR 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 sales tax streamlining movement.
The system must be in place no later than September 30, 2013. For more information on Alabama’s current sales/use tax system and the Streamlined Sales Tax (SST) effort at the national level, see an in-depth Comment written by our law clerk, Sims Rhyne, “A Useless Use Tax: Why Alabama Is the Poster Child for the Streamlined Sales and Use Tax Agreement,” published recently in the Cumberland Law Review (Volume 42, No. 2).
The primary sponsors of the bill were our friends Senator Slade Blackwell (R-Mountain Brook) and Rep. Jack Williams (R-Vestavia Hills). ARA’s President, Rick Brown, also 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.”
This legislation was one of the top recommendations of the Business Tax and Regulatory Reform Study Group recently established by Senator 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.” The Chair of our SALT Practice Team, Bruce Ely, served as Technical Adviser to the task force.
© May 2012. Bruce P. Ely/William T. Thistle, II/Bradley Arant Boult Cummings LLP. All rights reserved.