‘Quill' Appeal Nears as Alabama Issues Final Assessments

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By Jennifer McLoughlin

May 18 — Alabama is likely within a month of an appeal over its sales tax regulation that expands nexus for remote retailers, according to the state department of revenue.

Joe W. Garrett Jr., deputy co-commissioner for the Alabama DOR, told Bloomberg BNA May 18 that final assessments started to go out last week—less than 10 at this time—under the state's economic presence rule adopted in 2015. Garrett said that no appeals have been filed yet, but he expects one within a month.

DOR Rule 810-6-2-.90.03, which took effect Jan. 1, requires out-of-state sellers with more than $250,000 of in-state annual sales to collect and remit sales tax.

The final assessments follow preliminary assessments issued to remote vendors accounting for a majority of online sales into the state. Appeals from final assessments may be filed within 30 days before either Alabama's Tax Tribunal or a state circuit court.

Alabama has long welcomed a legal battle over the physical presence threshold for sales and use tax established in Quill Corp. v. North Dakota, 504 U.S. 298(1992), designing its nexus regulation to compel a challenge that may overturn the 24-year-old U.S. Supreme Court decision. Many states have followed Alabama's lead by pushing laws to expand the nexus footprint for out-of-state sellers.

South Dakota joined the growing multistate campaign with its own ‘ kill bill,'S.B. 106, which requires remote retailers with annual in-state sales exceeding $100,000 or 200 separate transactions to collect and remit sales tax. Two opposing complaints were filed in late April, one by the state department of revenue and the other by associations representing e-commerce businesses and catalog mailers, seeking competing declaratory judgments over the validity and constitutionality of the law (84 DTR K-2, 5/2/16).

To contact the reporter on this story: Jennifer McLoughlin in Washington at jmcloughlin@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com