AL rides new web sales tax to tune of $12M

Millions of dollars in online sales reported during holiday season

MONTGOMERY, AL (WSFA) - Alabama received $12 million more in online sales tax revenue in 2018 compared to 2017 during November and December, according to to the Alabama Retail Association.

This number jumped after a U.S. Supreme Court ruling in October of 2018 said Alabama could require online stores to join the simplified sellers use tax program. The program, which was originally voluntary, gives companies a flat eight percent online sales tax rate.

On Dec. 1 of 2017 there were 134 online retailers using the simplified sellers use tax program. Currently there are 997 online stores collecting the tax.

Half of the sales tax money goes to the state, which is split 75 percent for the general fund budget and 25 percent for the education trust fund. The leftover half is split 60 percent to the cities and 40 percent to the counties.

Sonny Brasfield with the Association of County Commissions of Alabama said this allows counties to invest the money from the online sales tax into the communities.

“For counties it’s a significant source of growth of revenue and that’s something that county governments have not had in a significant number of years," Brasfield said.

House Budget Chairman Rep. Steve Clouse said the additional money is good news for the general fund budget. He said it will take time to know how significant of an impact it will have on the budget.

“I think we need to go through this whole budget year first before we can make some kind of determination of what we’re looking at," Rep. Clouse said.

The Alabama Retail Association said this requirement change puts online retailers on the same playing field as brick and mortar stores.

“People that were shopping online from remote, out of state, online-only retailers were able to make decisions on a level playing field," said Melissa Warnke with the Alabama Retail Association.

“Alabama retailers didn’t have to fight basically with one hand tied behind their back because of that disadvantage,” she said.

The Alabama Retail Association is encouraging people to purchase items in brick and mortar stores. It says more of those dollars are invested back into local communities.

Copyright 2019 WSFA 12 News. All rights reserved.