Alabama cities and counties square off in Montgomery over online sales tax

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( — On one side of a looming showdown in Montgomery are Alabama's hundreds of cities. On the other side is the state's influential and politically shrewd county commission association. At issue is a potential wellspring of new revenue: taxes levied on online retail transactions.

It's coming to a head with a bill in the Legislature styled SB130.

In essence, the proposed legislation is all about online giant Amazon. Here's the background: Soon, Amazon will finalize its acquisition of the high-profile grocer Whole Foods.

Right now, Amazon - with no brick-and-mortar presence in the state - doesn't have to collect regular sales taxes from its Alabama customers. Instead, it voluntarily collects the state's Simplified Sellers Use Tax (SSUT), a flat rate of 8 percent.

Whole Foods, with stores in some of Alabama's big metros, will give Amazon a brick-and-mortar presence.

But SB130 will open the way for Amazon to stay in the SSUT program, levying the 8 percent.

Cities fear that other giant retailers - namely Walmart, with its burgeoning online arm - will follow suit, jumping to the SSUT as best they can.

After all, a shopper ordering groceries online at Walmart, then picking them up a few hours later, will enjoy a tidy savings paying an 8 percent flat tax rather than a city's regular rate of 10 percent or more.

The head of the Association of County Commissions of Alabama, Sonny Brasfield, contends that cities are blowing things out of proportion. "It's a misunderstanding of what SSUT is and I really think a misunderstanding of how the whole digital retail world operates today," he said.

The debate could start to boil at the Statehouse on Thursday, before the Senate Finance and Taxation General Fund Committee. The committee is chaired by state Sen. Trip Pittman, R-Montrose, who is SB130's sponsor.

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