On May 11, 2018, the Alabama Tax Tribunal entered an Opinion and Preliminary Order in Newegg, Inc. vs. Alabama Department of Revenue, Docket No. S. 16-613-JP, that serves as a significant blow to the Department of Revenue’s attempt to force out-of-state vendors to remit sales or use taxes to Alabama, at least for now. The Tribunal’s Opinion makes it clear, as does long-standing Alabama case law, that while Quill is still the law of the land, and it still is as of today, substantial physical presence will be required to impose tax remittance obligations in Alabama.
Readers should be reminded that the Revenue Department’s aggressive attempts to collect these taxes came at the behest of former Revenue Commissioner Julie McGee, who has been very fond of the mantra “Kill Quill.” The current Revenue Commissioner, Vernon Barnett has shown no such tendency toward aggressiveness in this area and the Department has largely been silent on the issue since he took over the position.
Obviously, it is important to remember that the Tribunal’s ruling is specific to the taxpayer in this case. However, the Opinion seems to clearly paint the picture that nothing has changed in Alabama with regard to the need for substantial physical presence, at least until the U.S. Supreme Court overturns Quill or Congress decides to finally take action on the issue.
A copy of the Opinion and Preliminary Order can be found here.