Alabama taxpayers that erroneously paid rental tax to a local taxing jurisdiction that does not actually have a rental tax on the books (e.g., Tuscaloosa County) should file refund claims as soon as possible and cease remitting rental tax to those jurisdictions.
At least one taxpayer did just that and had to fight off a retaliatory use tax assessment in order to receive its due refund of rental tax. See the Order in the Montgomery County Circuit Court case here for the outcome of that particular case.
Many local jurisdictions in Alabama do not actually have rental taxes that correspond with the state level rental tax. Taxpayers should check carefully to make certain all jurisdictions to whom they are remitting rental tax in Alabama actually has such a tax. To determine if a particular Alabama city or county actually has a rental tax, click here.
In response to the Order discussed above, at least one county, Tuscaloosa County, is now attempting to impose a new rental tax under the guise of "loophole closing." The Tuscaloosa County Commission recently approved a request to the Alabama Legislature to allow it to impose a new rental tax and that legislation is expected to come before the Alabama Legislature when it convenes in its 2015 Regular Session.
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