Alabama Addresses Obstacles to SSUTA
- Oct 23, 2012 | Gail Cole
Alabama is looking into what it would take to join the Streamlined Sales and Use Tax Agreement. To that end, the Alabama Streamlined Sales and Use Tax Commissionwas created "to identify and develop the programs necessary for the state to become compliant with the Streamlined Sales and Use Tax Agreement … in the event that federal legislation implementing the agreement or the general concepts of the agreement becomes law."
The Alabama Streamlined Sales and Use Tax Commission was tasked with the following duties:
- To develop a system for single entity administration of state and local sales and use tax collection and distribution.
- To develop a system designed to notify taxpayers of any changes to sales and use taxes.
- To develop a system that provides proper implementation of any changes to sales and use taxes.
- To develop a system that provides taxpayer audits "by persons or entities…as authorized by the agreement."
- To develop a database of all state and local sales and use tax rates.
- To develop "[a]ny other systems, programs, or policies" deemed necessary for compliance.
The goal of the Streamlined Sales and Use Tax Agreement is to "simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance" for businesses involved in all types of commerce. Simplification may be the ultimate goal, but it is no simple task to reach it--particularly in Alabama, which does not have a single general sales and use tax rate for the whole state.
Alabama is ready to simplify its tax system by making the Department of Revenue "the single point of administration for all Alabama sales and use taxes… ." At the same time, it wants to keep "local tax officials" involved. To that end, the Alabama Streamlined Sales and Use Tax Commission recommends the creation of "a State and local Advisory Council to ensure that counties and municipalities would have meaningful input into the development, implementation and management of the state-level process." It has also been suggested that local governments retain the right to audit taxpayers with respect to applicable state, county and municipal taxes.
Several aspects of the Alabama Code conflict with the SSUTA. These include, but are not limited to:
- Terms with conflicting definitions between Alabama state law and the SSUTA, including, but not limited to: "Sale or Sales, Gross Proceeds of Sales, Gross Receipts, Wholesale Sale, Retail Sale, Storage Use, Sales Price… ."
- Tax Rates: Under the SSUTA, a member state cannot have multiple state sales and use tax rates (barring certain exceptions). Alabama tax rate differences that conflict with SSUTA include, but are not limited to: the automotive tax rate applied to mobile home set up; the reduced rate of tax on sales of manufacturing machines and replacement parts.
- Local Tax Rates: Among other issues, Alabama must address the fact that "[l]ocal jurisdictions that levy a sales or use tax may not have more than one local sales tax rate or more than one local use tax rate per local jurisdiction."
- Identical State and Local Tax Bases: "Generally, the tax base for local jurisdictions shall be identical to the state tax base." Currently in Alabama, every county and municipality has the right to levy and enforce its own sales, use, and rental taxes, and to provide its own sales and use tax exemptions.
Conforming to the Streamlined Sales and Use Tax Agreement is a big task, and requires support. Alabama Governor Robert Bentley does support "federal sales tax laws that treat all businesses equally."