MONTGOMERY, AL (WKRG) — The Alabama Department of Revenue has finally released the list of 115 online retailers collecting an eight-percent sales tax from purchases made within the state.
IKEA, Overstock.com, 1-800-Contacts, Wayfair and Spotify are some of the larger companies that have joined Amazon in Alabama’s Simplified Seller’s Use Tax, an updated law that keeps companies compliant with the state’s tax codes. All purchases made by Alabama residents at these websites now come with a standard eight-percent sales tax.
As we reported last year, Amazon was the first company to publicly participate in the SSU tax in Alabama. At the time, it was nicknamed the “Amazon tax,” due to the disappointment from Alabama customers who had enjoyed more than a decade of tax-free shopping from the world’s number-one online retailer.
Some of the other notable companies collecting the SSU tax are GoDaddy, Vistaprint, Zappos, Twitch, and Garmin.
“This is not a new tax,” said Deputy Revenue Commissioner Joe Garrett. “This is the same sales tax that would be due, with just another way it’s being collected.”
Prior to the SSU being introduced, Alabama consumers who made an online purchase were obligated to record and remit eight-percent of the purchase to the state in their annual tax filing. However as the popularity of online shopping grew, few actually chose to pay the tax, instead choosing to see online shopping as a way to purchase product without owing any money to the state.
The state of Alabama lost hundreds of millions of dollars, perhaps even more than that, through outdated tax codes leaving websites without a means to remit eight-percent of purchases made from residents within the state.
Finally in 2016, the Department of Revenue initiated the Simplified Seller’s Use Tax with more than 70 participants, including Amazon. The number of retailers in the SSU Tax has since grown to 115, with the list officially becoming public record on Saturday.
“This is an improvement in the state’s tax system. It makes tax reporting easier, simpler for business. When businesses are able to collect and remit sales tax, that removes an obligation from the consumers,” said Garrett.
Companies with brick-and-mortar locations in the state, such as Walmart and Apple, abide by the state and county’s existing tax code. The SSU Tax only applies to companies without a physical retail store within the state of Alabama.
“I know we don’t think of that as a ‘good thing’ when [consumers] have to pay the tax, but really it relieves them of that obligation. I think this is a step in the right direction for Alabama’s tax system to be able to simplify our system enough that the remote sellers are willing to participate in it and collect the tax.”
Tax revenue from the SSU program will split up as follows:
- 50% to the state of Alabama (majority to the General Fund, with a portion going to the Special Education Trust Fund)
- 25% to all Alabama counties (allocated proportionately based on county population)
- 25% to all Alabama cities (allocated proportionately based on city population)