1. Alabama’s Simplified Sellers Use Tax Joe Garrett, Deputy Commissioner Alabama Department of Revenue

2. Alabama’s Experience Where we were 2015:
Bentley administration identified remote sales/use tax collection as a priority.
Raises revenue without raising taxes.
Traditional sales tax base is eroding.
Local brick and mortar retailers, some of our most important partners in the tax collection process, are suffering at the hands of online and untaxed competition.
Congressional inaction.

3. Federal Legislation
Since 2005, the following bills have been introduced in Congress:
Main Street Fairness Act (MSFA)
Marketplace Equity Act (MEA)
Marketplace Fairness Act (MFA)
Remote Transaction Parity Act (RTPA)
Online Sales Simplification Act (Goodlatte Proposal)
States decide to take action into their own hands after MFA passes the Senate in 2013 only to die in House (Goodlatte’s committee)

4. U.S. Supreme Court - Justice Kennedy Opines
Justice Kennedy’s Concurrence in DMA v. Brohl (2015):
“Given these changes in technology and consumer sophistication, it is unwise to delay any longer a reconsideration of the Court’s holding in Quill. A case questionable even when decided, Quill now harms States to a degree far greater than could have been anticipated earlier.”
“The legal system should find an appropriate case for this Court to reexamine Quill and Bellas Hess.”
On January 20, 2016, the National Conference of State Legislatures issued a letter to state legislatures urging them to act to expand statutory authority to collect sales tax.

5. Alabama’s Response
Department’s Response to Kennedy’s Concurrence in DMA
Simplified Sellers Use Tax Program
Enacted in 2015 – Program active in October 2015 with first remittance in November 2015
Amended in 2016
Economic Nexus Rule for Large Remote Sellers

6. Simplified Sellers Use Tax Remittance Program
Act Simplified Sellers Use Tax Remittance Act
Effective October 1, 2015
Eligible seller collects, reports and remits a flat 8 percent tax
Regardless of where shipped w/n Alabama
No additional sales or use tax due on the transaction
Two percent discount for participants
Participation Voluntary
Seller required to identify tax as SSUT on invoice
Single return, single audit

7. Simplified Sellers Use Tax Remittance Act
Act Updates to Simplified Sellers Use Program
Updates to definition of an “Eligible Seller”
An eligible seller may remain in the program provided they were a participant for at least 6 months prior to establishing a physical presence or filing obligation unless the seller establishes a physical present through a physical business address for the purpose of making instate retail sales or establishes a presence through an affiliate making sales at a physical business address in Alabama.
Updates Federal Enforceability.
Updates to allow continued participation of eligible sellers in the program unless federal legislation removes current federal limitations on the ability of the Department to enforce its sales and use tax jurisdiction on businesses that lack an instate physical presence.
SSUT Program repositioned Alabama from being one of the most difficult states for remote sales tax collection to one of the easiest.

8. The Success of Alabama’s Simplified System
Amazon
Amazon started collecting the simplified sellers use tax effective November 1, 2016.
First collections due December 20, 2016.
Motivated by a combination of our new simple system, the economic nexus rule and Amazon’s expanding footprint.
Amazon generated over $107 billion in sales in 2015.

9. The Success of Alabama’s Simplified System
78 remote sellers participating in the program.
118 applicants to date - 75 approved/ 39 denied/1 no longer eligible due to nexus
Total revenue collected through the program to date (November collection period): $5,813,679
Agreements have been reached with several large remote sellers that are participating in the program.
While we are moving forward with litigation to overturn Quill, we’ve already achieved significant compliance with remote sales tax collection because of the success of our simplified system and our regulation.

10. The Success of Alabama’s Simplified System
FY 2016 Collections
1st Quarter (Oct – Dec 15) $12,570.77
2nd Quarter (Jan – March 16) $469,600.51
3rd Quarter (April – June 16) $1,807,306.37
4th Quarter (July – Sept 16) $2,075,763.08
Total $4,365,240.73
FY 2017 Collections
1st Quarter
October 2016 $696,948.41
November $751,489.98

11. Alabama’s Sales Tax Economic Nexus Regulation
Rule Requirements for Certain Out-of-State Sellers Making Significant Sales into Alabama.
Effective January 1, 2016
Out-of-state sellers who lack an Alabama physical presence but who are making retail sales of tangible personal property (TPP) into the state have a substantial economic presence in Alabama for sales and use tax purposes and are required to register and collect and remit tax when seller’s retail sales of TPP sold into state exceed $250,000 per year based on the previous calendar year’s sales.
Remote seller may comply with rule by participating in the Simplified Sellers Use Tax Remittance Program.

12. Alabama Litigation Newegg Inc., v. Magee. Docket # S.16-613
Filed June 9, 2016 with the Alabama Tax Tribunal.
Challenges the constitutionality of the Alabama economic nexus rule
Taxpayer argues both that:
It did not and does not have the necessary physical presence in Alabama to satisfy substantial nexus standard.
Rule conflicts with sales and use tax imposition statutes.

13. Thank you Joe Garrett, Deputy Commissioner Alabama Department of Revenue