Alabama Republicans Are Now Taxing Retail Sales on the Internet by Taxpayer Tom

God put the Republican Party on earth to cut taxes. If they don’t do that, they have no useful function.  Robert Novak

Without fanfare, Alabama lawmakers passed The Simplified Sellers Use Tax Remittance Act (SB437, Act 2015-448), on June 4, 2015, the last day of the regular session of 2015. Senators Bill Holtzclaw and Paul Sanford were among the bill’s sponsors.

It’s a Republican tax increase of 8 % on internet sales by out of state retailers, a law disguised as a voluntary agreement between the state and internet retailers not subject to Alabama law, an agreement which keeps the names of the participating retailers secret, for the most part.

 

The law established a uniform use tax rate of 8 % for the Simplified Sellers Use Tax Remittance Program. This means that someone in Birmingham pays 8 % rather than that city’s 10 % sales tax, but someone in the unincorporated part of Madison County also pays 8 % instead of the 5.5 %  sales tax in the county. There is an unpublicized provision in the law for taxpayers to apply for a refund for the over charges – how well is that going to work if taxpayers do not know about it?

For its trouble, Amazon and others collecting the tax will get to keep 2 percent of the use tax they collect from their Alabama customers.

The new tax is expected to provide $40 million for the state’s FY 2017 budget. Local government is in on it too. For example, the city of Madison has already received quarterly payments of $1,710 in April and $6,581 in July.

Alabama Chief Justice Roy Moore is on the verge of being removed form office for defying the US Supreme Court’s gay marriage decision in Obergefell v. Hodges. The rest of the state government of Alabama is defying the US Supreme Court’s decision in Quill v. North Dakota on not being able to collect use taxes from out of state on line retailers.

So why is Governor Bentley not also on the verge of being removed from office? I guess gay sex is one thing and screwing taxpayers is quite another.

Also, SB437 is unconstitutional because the origination clause of theAlabama constitution requires bills for raising revenue to begin in the House of Representatives:

Sec. 70. All bills for raising revenue shall originate in the house of representatives. The governor, auditor, and attorney-general shall, before each regular session of the legislature, prepare a general revenue bill to be submitted to the legislature, for its information, and the secretary of state shall have printed for the use of the legislature a sufficient number of copies of the bill so prepared, which the governor shall transmit to the house of representatives as soon as organized, to be used or dealt with as that house may elect. The senate may propose amendments to revenue bills. No revenue bill shall be passed during the last five days of the session.

And the legislature certainly treated SB437 as a revenue bill. It began as a senate bill and was referred to the senate Committee on Finance and Taxation General Fund. And when enacted, the law amended The Code of Alabama, Title 40, Revenue And Taxation, by adding section 40-23-191 through 40-23-199 to Section 23, Sales and Use Taxes.

SB437 was:

  • Introduced in the senate on 4-30-15.
  • Passed by the senate on 5-21-15.
  • Amended and passed by the house on 6-4-15 and approved by the  senate on the same day, the last day of the legislative session.

And so this law is also unconstitutional because, as cited above, revenue bills cannot be passed during the last five days of a legislative session.

Some lawmakers and supporters of this tax increase quibble that the use tax is already on the books and that the new law is not really a tax increase because taxpayers already have an existing responsibility to pay it. This is dissembling because the tax has not been collectable because the law was unenforceable. The old law was incomplete requiring new law to fully implement it. What looks, walks, flies, swims, eats, breeds, and quacks like a duck … is a duck and SB437 is a tax increase.

The Simplified Sellers Use Tax Remittance Act is a bad law enacted in a bad way. It is an unconstitutional tax increase and I am ashamed this deed was done by our Republican led legislature.

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