MONTGOMERY, AL (WSFA) - E-Commerce or online sales by remote sellers outside of our state to buyers in Alabama exceeded $34 billion dollars in 2011, according to a study by the University of Alabama School of Business. Retail online sales, subject to sales tax, totaled $2.3 billion in our state. Unfortunately, the State of Alabama only received tax on about half of the purchases with estimates ranging from $263 million to $309 million in non-collected tax revenue for our state.
The inability of Alabama to require sellers who are not physically located in Alabama to collect and remit applicable sales taxes stems from a 1977 and 1992 Supreme Court ruling.
Not good news if you are an owner of a local business such as Cohen's Electronics, The Locker Room or Stonehenge Gallery. These local business owners, tax payers and job providers fill their stores with merchandise only to have more and more buyers test out or "showroom" their products only to then go online and purchase tax free. Not a healthy prognosis for local business owners in the future as online retail sales is expected to double by 2016.
This holiday season we want to encourage you to do a couple things. Number one, buy local and support local businesses that provide jobs, support local organizations and pay taxes. Number two, contact our Alabama Senators and encourage them to vote for the Marketplace Fairness Act that would compel Internet and other remote sellers to collect and remit sales taxes to Alabama.
As one local retailer stated so well, "Good retailers are not afraid of competition...all we want are the same rules to apply to everybody."