1/23/2014

Landmark Bill Would Create Online Single-Point Filing System for Business Personal Property Tax Returns

Client Alert

Representative Greg Wren (R – Montgomery) and House Speaker Mike Hubbard (R – Auburn) have co-sponsored House Bill 108, which easily passed the House on January 16. HB 108 is part of the House Republican Caucus’ “Commonsense Conservative Agenda” for 2014. The legislation would grant businesses two new options for filing their annual business personal property returns and paying the associated property tax: (1) an online, single-point filing system, and (2) a short form tax return. HB 108 is another step toward simplifying and streamlining Alabama’s state and local tax system, and follows the example of the landmark ONE SPOT legislation (Act 2012-279), which created an online, single-point filing system for state and local sales, use and rental taxes.

”Unlike the federal government, which continues to add onerous regulations to the plates of small businesses, Republicans understand that we must cut the red tape,” said Alabama House Speaker Mike Hubbard. “We understand that if we make it easier for business owners, they will have more time to work to expand and create more jobs. We want Alabama to be known as the most business-friendly state in the nation, and this bill is another step in that direction.”

Under HB 108, the Alabama Department of Revenue (“ADOR”) would be responsible for creating a centralized online filing system for business personal property tax returns, called the Optional Personal Property Assessment Link (“OPPAL”). All Alabama taxing jurisdictions will be required to accept business personal property tax returns filed using OPPAL; however, the system is optional to taxpayers. Not only does HB 108 create a single-point filing system, it also provides uniform procedures and standardized formatting for online filing across all 67 Alabama counties. The OPPAL system must be operational no later than September 30, 2016, and will be available for use in tax periods beginning on or after October 1, 2016. HB 108 also creates a ten-member advisory committee to review ADOR’s design and operation of the system and to make recommendations regarding system requirements and functionality to the Commissioner of Revenue. The advisory committee must hold its first meeting no later than September 30, 2014.

Under the current filing system, taxpayers are required to file annual business personal property tax returns in each of the 67 counties where they do business. OPPAL would allow taxpayers to file all their business personal property tax returns in one place, with OPPAL remitting the returns and associated tax payments to the appropriate counties.

In addition to OPPAL, HB 108 also creates a non-itemized short form tax return for certain small businesses. The short form return will be available to taxpayers who either: (1) filed an itemized personal property tax return that included $10,000 or less in total property acquisition costs in the previous tax year, or (2) properly filed a short form in the previous tax year. If the short form return is used, the $10,000 amount will be used by the local tax assessing official as the market value of the property when calculating the taxes due.

The version of the bill that passed the House excludes Shelby County from the requirement of allowing taxpayers to use the OPPAL system because that county already has its own electronic filing system for business personal property tax returns. The bill has been assigned to the Senate Job Creation and Economic Development Committee. It is expected that the committee will vote on HB 108 sometime next week.

William T. Thistle, II