Tax Professionals to Alabama: Don’t Complicate Sales Tax
- Jun 17, 2013 | Gail Cole
The Tax Executives Institute, Inc. (TEI), the “preeminent association of tax professionals worldwide,” has nexus threshold for state and local sales taxes.”
In the letter, TEI explains that “[f]or decades, Alabama has applied a harmonized rule requiring businesses to collect and remit both state and local sales and use taxes only when the business has ‘substantial nexus’ with both Alabama and the local jurisdiction.”
Proposed Regulation 810-6-5-.04.02, however, would “impose a lower and amorphous nexus threshold for local sales and use taxes….” If enacted, it would require any business that ‘purposefully direct[s] its business activities towards the consumers of that jurisdiction” to collect and remit sales tax.
TEI stresses that such an approach “creates an undue administrative burden on businesses with minimal operations in the county seeking to impose its tax….” Furthermore, there’s a good chance any such regulation would run smack into “U.S. constitutional limitations on state and local taxing powers.”
The Department of Revenue held a hearing on the proposed regulation on June 11, 2013. The outcome of the hearing has yet to be revealed.
While Alabama considers a regulation that would arguably complicate its sales tax law, Congress is considering the Marketplace Fairness Act of 2013, legislation that would require states to simplify their sales tax law before they could obligate remote vendors to collect sales tax.
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