Supreme Court Rules States – Can Collect Online Sales Tax

By Steve FlowersGuest Columnist

The State of Alabama’s fiscal year begins next week on October 1.  Our state’s finances are not the best in the world.  However, they got a boost from the U.S. Supreme Court earlier this year, The high tribunal ruled that states can collect sales tax on internet sales.

This was one of the most inequitable scenarios I have ever seen.  If you went to the corner hardware store or Lowe’s or Walmart to buy a hammer and paint, you paid sales tax. However, if you bought these same items online you did not.  That is not fair to the store or the state. What is even more unfair is if your wife went down to the local dress shop and tried on an expensive dress she liked and then came home and bought it online.  How fair is that to the store, the clerk at the store or the state?

Finally, and thankfully, the Supreme Court clarified this inequality that had persisted for decades, since the inception of the internet.

Alabama had already gotten ahead of the curve in regards to collecting online sales tax.  Through the wise stewardship of House Ways and Means Chairman, Steve Clouse, R-Ozark, we had joined 19 other states in passing legislation companies were to voluntarily pay the online sales tax.

The legislation, passed in 2015, was entitled the Simplified Sellers Use Tax.  It allowed companies the permission to collect sales tax to be remitted to the state voluntarily in exchange for locking in a fixed rate of eight percent no matter where in the state an online item was sold.  As you know, the sales tax rate deviates throughout each city and locale.  In Alabama’s case, the money collected under our SSUT Act was divided 50/50 between the state and cities and counties.  The city’s and county’s half is disbursed based on population. The state’s half is divided 75 percent to the General Fund and 25 percent to the Education Fund.

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