Kay Ivey signs amendments to Simplified Sellers Use Tax program

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Governor Kay Ivey signed amendments to the Simplified Sellers Use Tax (SSUT) program into law on Friday.

HB470, sponsored by Fairfield-Democrat State Rep. Rod Scott passed in the state House and Senate in late March.

“This legislation will help bring about a competitive balance between brick-and-mortar retailers in Alabama and third-party online sellers, while streamlining the collection of use taxes that are currently due on online transactions,” Ivey said. “Use taxes are an important funding resource for Alabama’s General Fund and local governments, and the monies collected will be used to improve and expand much needed services.

The legislation, effective Jan. 1, 2019, requires that online marketplaces collect and dispatch use taxes on sales made through their store by third-party sellers, and requires them to report their sales to the Alabama Department of Revenue.

It also requires that marketplaces notify customers of their use tax obligations, and allows those already participating in the SSUT program, who have establish a physical presence in this state, to continue to participate in the program.

Before the program launched in 2015, online sellers without a brick-and mortar presence in the state were not responsible for collecting and remitting taxes on sales made within the state, which resulted in millions of dollars of revenue lost, and put retailers who did collect sales tax at a disadvantage.

Currently, almost 200 sellers participate in SSUT. They have generated more than $87 million in collections since the program launched in 2015 and more than $27 million collected in the first four months 2018. The amendments signed by Ivey to increase the tax compliance by third-party online sellers could result in an increase of as much as $40 million annually. 60 percent of the local distribution will go to municipalities and counties will get 40 percent.

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