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Montgomery to consider joining Tuscaloosa-led challenge to state tax split for online sellers
Summary
The Montgomery City Council discussed a resolution to join Tuscaloosa in litigation against the Alabama Department of Revenue over how the simplified sellers use tax (SSUT) is allocated, with staff saying the city receives about 2.4 cents per dollar of online sales compared with 3.5 cents on brick-and-mortar sales.
The council reviewed a resolution authorizing the city to join the City of Tuscaloosa in litigation challenging how the Alabama Department of Revenue allocates portions of the simplified sellers use tax (SSUT).
Council members and staff discussed revenue implications. City staff said the city currently receives roughly 60% of the 4¢ SSUT allocation for online sales (about 2.4 cents per dollar) while brick-and-mortar sales allocation yields roughly 3.5 cents per dollar for municipalities. The goal of the legal action is to secure a larger share more closely aligned with brick-and-mortar distributions.
One councilmember asked how much revenue the litigation might mean for Montgomery; staff said they had tracked estimates in 2023 but would need time to update the figures. Staff said an attorney who is working the case will present to council after the resolution is passed so the council understands next steps.
No vote was recorded in the work session. Council members asked staff to bring updated revenue estimates and to arrange a presentation by counsel about the litigation pathway and likely next steps.
