Senate committee advances bill letting business-license disputes go to Alabama Tax Tribunal, debate centers on escrow penalty

SB 174, a bill that would require municipalities to post business-license calculations online and permit business owners to appeal municipal licensing rulings to the Alabama Tax Tribunal, received a favorable report from the Senate committee after a public hearing and an adopted amendment.

Sponsor Senator Chambliss introduced the bill as a measure “that allows a business owner to appeal a ruling by municipality accounting to the Alabama tax tribunal instead of having to hire lawyers, go, go to court, file lawsuits,” and said the change is “a taxpayer friendly bill.” He told the committee the bill would be effective Oct. 1 and that the first reporting deadline would be March 30 of the following year.

The bill drew support from business groups. Jeremy Walker of the Alabama Realtors said the measure would help small-business licensees by increasing transparency, easing appeals and curbing aggressive third-party collectors. “Number 1 is transparency. In some cities, it's very hard to find how much you're supposed to pay for a business license,” Walker told the committee. He added the bill’s appeal route to the tax tribunal would be “lower cost for the citizen and lower cost for the city.”

Rosemary Elbash of the National Federation of Independent Business also urged passage, saying the bill would reduce confusion about when merchants owe municipal fees. “This would be a big help in a big small-business friendly bill,” she told lawmakers.

The Alabama League of Municipalities, through legislative counsel Caleb Beck, opposed the bill in its current form because of an escrow provision tied to the reporting requirement. Beck said the provision, located in subsection C on page 2 of the bill, “does not provide a grace period, it does not provide a notice of noncompliance and it gives limited time for education and implementation.” He warned that the escrow requirement could “tie up municipal funds for inadvertently failing to timely file a report which could delay potential municipal projects, municipal services and things of that nature.” Beck asked the committee to remove the escrow provision to allow time for training and implementation.

Committee discussion focused on the escrow language and implementation timeline. Senator Chambliss said the Oct. 1 effective date and a March 30 reporting deadline provide “ample time for notice and for education,” and described the escrow element as a tool to draw attention to bad actors who repeatedly fail to report.

An amendment offered and adopted during the hearing clarified that counties that do not levy a county business tax would be exempt from the reporting requirement that would otherwise require filing a zero report. The amendment was moved and put to a roll call in which multiple senators recorded “aye”; the amendment was adopted and the bill moved forward as amended. A subsequent motion for a favorable report was made and seconded; the committee recorded the bill as receiving a favorable report.

What’s next: SB 174 will advance from committee with the adopted amendment; the committee record shows the motion for a favorable report carried. The bill’s reporting deadline language and its escrow provision were the main outstanding points raised during the hearing, and municipal representatives asked for additional training time and an opportunity to revisit the escrow penalty if implementation proves problematic.