SSUT has positive impact on River Region

By ART PARKER

It was something we didn’t think of for a long time, but as online sales grew local governments in Alabama began to miss sales tax dollars. It was only a matter of time before this changed, and justifiably so.

A few years ago the Alabama Legislature passed the “Simplified Seller Use Tax Remittance Act (SSUT).” This allows eligible sellers to participate in a program to collect, report and remit a flat eight percent (8%) sellers use tax on all sales made into Alabama. Dollars are divided between municipalities and county government.

Bolstering the state’s legislative act is the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. on June 21, 2018. The narrow 5-4 decision terminated the idea that sales taxes can only be collected on purchases made from those with a physical presence in their state. The ruling overturned previous decisions made before e-commerce existed.

One of the key terms in all of this is “remote seller,” which is defined as an out-of-state seller that has no physical presence in the state in which the sale is made.

There is no doubt that online sales taxes have been important to local governments, especially since municipalities and county commissions missed out on some traditional sales tax revenue.

According to a report of al.com, the state recently took in $187 million in sales tax in May, which was 12.36 percent less than a year ago. But at the same time, Alabama recorded $34.9 million from the simplified sellers use tax, an increase of 84 percent over a year ago.

There has been a boom in SSUT collected in the last couple of months in the River Region also. The reason appears to be simple: Coronavirus. Online shopping has taken the place of some traditional shopping. With the Coronavirus local municipalities and counties would be losing revenue at a critical time, but the SSUT has helped tremendously.

The SSUT is collected by local government two months after actual sales. For example, February collections are actually for consumer sales in the month of December.

Note: All sales tax figures are rounded to the nearest 1,000

Counties

Montgomery County SSUT collections last six months:

November (collected in January) $276,000

December (collected in February) $417,000

January (collected in March) $254,000

February (collected in April) $247,000

March (collected in May) $278,000 (+12.56% over February)

April (collected in June) $336,000 (+20.86% over March

Elmore County SSUT collections last six months:

November (collected in January) $95,000

December (collected in February) $144,000

January (collected in March) $87,000

February (collected in April) $85,000

March (collected in May) $96,000 (+10.5% over February)

April (collected in June) $116,000 (+20.83% over March)

Autauga County SSUT collections last six months:

November (collected in January) $66,000

December (collected in February) $99,000

January (collected in March) $60,000

February (collected in April) $59,000

March (collected in May) $66,000 (+11.8% over February)

April (collected in June) $80,000 (+21.21% over March)

Municipalities

City of Montgomery SSUT collections last six months:

November (collected in January) $614,000

December (collected in February) $928,000

January (collected in March) $565,000

February (collected in April) $550,000

March (collected in May) $618,000 (+12.36% over February)

April (collected in June) $748,000 (+21.03% over March)

City of Millbrook SSUT collections last six months:

November (collected in January) $44,000

December (collected in February) $66,000

January (collected in March) $40,000

February (collected in April) $39,000

March (collected in May) $44,000 (+12.82% over February)

April (collected in June) $53,000 (+20.9% over March)

City of Wetumpka SSUT collections last six months:

November (collected in January) $19,000

December (collected in February) $29,000

January (collected in March) $18,000

February (collected in April) $17,000

March (collected in May) $20,000 (+15.00% over February)

April (collected in June) $24,000 (+20.00% over March)

City of Prattville SSUT collections last six months:

November (collected in January) $101,000

December (collected in February) $153,000

January (collected in March) $93,000

February (collected in April) $91,000

March (collected in May) $102,000 (+10.78% increase over February)

April (collected in June) $124,000 (+21.56% increase over March)

The Coronavirus shutdown (stay at home) began in mid-March but the entire month of April was under shutdown directives, which accounted for an even larger increase in online sales, and subsequently SSUT collections.

Bart Mercer, District Four Commissioner of Elmore County, which includes the majority of Millbrook, said, “Elmore County Commission has no other countywide sales tax and we have the second lowest property tax in the nation. It goes without saying that the money that comes to the county from SSUT has become very important.”

Millbrook Mayor Al Kelley said, “We are seeing big increases in the SSUT and that is good news. There is more good news. Our regular sales tax has not decreased because of it. We have always enjoyed a solid financial position in Millbrook and this is something that helps to maintain the status quo.”

Among the municipalities, Prattville had the largest percentage increase from March to April.

Daniel F. Oakley, CPA, Finance Director for The City of Prattville said his city seems to have weathered the worst of the financial impact of Covid-19 on tax revenue thanks in part to the SSUT.

“In what is anticipated to be our worst month in terms of the COVID-19 financial impact, our May tax revenue overall collections (April sales) were down 14.22%, while our sales tax only collections were down 12.25%. The simplified sellers use tax collection for April 2020 sales, however, was up 84.81% over April 2019. Despite this reduction in revenue over the last couple of months, the City remains in very solid financial position. All department heads were successful in reducing expenses to a point where we have reported sizable positive net income totals for each of the last two months in the General Fund. This has been achieved without layoffs or furloughs,” said Oakley.