UPDATE: Mobile County Commissioners have just voted to join a lawsuit challenging Alabama’s Simplified Sellers Use Tax (SSUT), a move that could have significant implications for local revenue. This decision was made during a work session on Thursday, as the county seeks to address the potential financial losses from the controversial tax structure.
The lawsuit, originally filed by the City of Tuscaloosa and the Tuscaloosa City School District, argues that the SSUT, implemented in 2015, is unconstitutional. This tax allows online retailers without a physical presence in Alabama—such as Amazon, Walmart, Kroger, and others—to pay a flat 8% tax instead of the traditional sales tax on online purchases.
Critics claim that this structure is unfair as it permits major retailers to pay the same flat rate while local businesses, which must collect standard state and local taxes, are at a disadvantage. Mobile County officials argue that local cities and schools are losing millions of dollars each year due to these merchants opting out of collecting the traditional sales tax.
This tax debate comes at a time when the SSUT has generated $4.4 billion in revenue since its inception, growing from just $4.3 million in its first year to an impressive $962.5 million this year. In contrast, standard sales tax revenue in Alabama has totaled $27.4 billion during the same period.
For instance, a $100 online purchase incurs an $8 tax under the SSUT, while the same purchase at a physical store would result in a $10 tax, of which Mobile County would receive just $1. This creates a potential revenue increase of 60 cents for Mobile County under the SSUT compared to traditional sales tax.
“This is about ensuring that our local communities and schools receive the funding they deserve,” said a spokesperson for the Mobile County Commission. “We cannot allow larger corporations to sidestep their responsibilities while our local businesses suffer.”
The Mobile County Commission’s decision to join this lawsuit reflects a growing concern among local governments about the fairness and sustainability of the SSUT. As the digital shopping landscape evolves, officials are increasingly questioning the long-term implications of allowing major online retailers to benefit from reduced tax obligations.
As this lawsuit progresses, residents and local businesses are urged to stay informed about the potential changes in tax policy that could impact their financial contributions to the community. The outcome of this legal battle could reshape how online sales are taxed in Alabama and influence similar discussions nationwide.
Next steps include preparations for court proceedings, with Mobile County now officially listed as a defendant in the case. Observers are encouraged to monitor this developing situation, as it holds significant ramifications for both local economies and the broader implications of online commerce regulation.
