UPDATE: We have edited this article to include statistics from the City of Wetumpka and Autauga County.
From the Elmore/Autauga News
It was something we didn’t think of for a long time. As online sales grew local governments in Alabama began to miss sales tax dollars. It was only a matter of time before this changed, and justifiably so.
A few years ago the Alabama Legislature passed the “Simplified Seller Use Tax Remittance Act.” This allows eligible sellers to participate in a program to collect, report, and remit a flat eight percent (8%) sellers use tax on all sales made into Alabama. Dollars are divided between municipalities and county governments.
Bolstering the state’s legislative act is the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. on June 21, 2018, which mandates that an out-of-state seller with no physical presence in a state (i.e., remote seller) is required to collect and remit to the state sellers use tax through the SSUT program. Some elected officials use the words “online tax” to describe the SSUT.
A remote seller is defined as an out-of-state seller that has no physical presence in Alabama.
There is no doubt that online sales taxes have been important to local governments, especially since municipalities and county commissions missed out on some traditional sales tax revenue.
Locally, in the cities of Millbrook and Prattville, and Elmore County, online sales have boomed in recent months. The reason is simple: COVID-19. Online shopping has taken the place of some traditional shopping. With the pandemic, local municipalities and counties would be losing revenue at a critical time, but the SSUT has helped tremendously.
The SSUT is collected by the local government two months after actual sales. For example, February collections are actually for consumer sales in the month of December.
Elmore County SSUT collections last six months:
November (collected in January) $95,000
December (collected in February) $144,000
January (collected in March) $87,000
February (collected in April) $85,000
March (collected in May) $96,000 (+10.5% over February)
April (collected in June) $116,000 (+20.83% over March)
Autauga County SSUT Collections last six months:
November (collected in January) $66,000
December (collected in February) $99,000
January (collected in March) $60,000
February (collected in April) $59,000
March (collected in May) $66,000 (+11.8% over February)
April (collected in June) $80,000 (+21.21% over March)
Note: All tax figures are rounded to the nearest $1,000.
City of Millbrook SSUT collections last six months:
November (collected in January) $44,000
December (collected in February) $66,000
January (collected in March) $40,000
February (collected in April) $39,000
March (collected in May) $44,000 (+12.82% over February)
April (collected in June) $53,000 (+20.9% over March)
Note: All tax figures are rounded to the nearest $1,000.
The Coronavirus shutdown (stay at home) began in mid-March but the entire month of April was under shutdown directives, which accounted for an even larger increase in online sales, and subsequently SSUT collections.
Bart Mercer, District Four Commissioner of Elmore County which includes the majority of Millbrook, said, “Elmore County Commission has no other countywide sales tax and we have the second-lowest property tax in the nation. It goes without saying that the money that comes to the county from SSUT has become very important.”
Millbrook Mayor Al Kelley said, “We are seeing big increases in the SSUT and that is good news. There is more good news. Our regular sales tax has not decreased because of it. We have always enjoyed a solid financial position in Millbrook and this is something that helps to maintain the status quo.”
City of Prattville also reported increases in the SSUT.
City of Prattville SSUT collections last six months:
November (collected in January) $101,000
December (collected in February) $153,000
January (collected in March) $93,000
February (collected in April) $91,000
March (collected in May) $102,000 (+10.78% increase over February)
City of Wetumpka SSUT collections last six months:
April (collected in June) $124,000 (+21.56% increase over March)
Note: All tax figures are rounded to the nearest $1,000.
“In what is anticipated to be our worst month in terms of the COVID-19 financial impact, our May tax revenue overall collections (April sales) were down 14.22%, while our sales tax only collections were down 12.25%. The simplified sellers use tax collection for April 2020 sales, however, was up 84.81% over April 2019. Despite this reduction in revenue over the last couple of months, the City remains in very solid financial position. All department heads were successful in reducing expenses to a point where we have reported sizable positive net income totals for each of the last two months in the General Fund. This has been achieved without layoffs or furloughs,” said Daniel F. Oakley, CPA, Finance Director for The City of Prattville.
