tag:blogger.com,1999:blog-85206584468754751312024-02-02T16:55:07.257-06:00ALABAMA TAX LAWDiscussing issues of importance in Alabama state and local tax.Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.comBlogger97125tag:blogger.com,1999:blog-8520658446875475131.post-80039305876166829402024-01-04T14:30:00.002-06:002024-01-04T14:30:54.454-06:00Alabama Once Again Scores Poorly on Tax Administration<p>The Council On State Taxation ("COST") recently released its latest scorecard on state tax administration across the United States. It comes as little surprise that Alabama continues to score poorly in the evaluation. In the current report, Alabama grades out at a paltry C-.</p><p>Alabama's poor performance is partially a result of the "pay-to-play" required for appeals of tax assessments to circuit court, extremely short appeals periods, the ability of local jurisdictions to opt-out of the Alabama Tax Tribunal's jurisdiction, difficulty in obtaining revenue rulings from the Department of Revenue, as well as other fairness issues.</p><p>For the full report from COST, <a href="https://www.cost.org/globalassets/cost/state-tax-resources-pdf-pages/cost-studies-articles-reports/cost-2023-admin-scorecard---final-draft-combined.pdf" target="_blank">click here</a>.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi71MNTlQ6KjOos3diGnloBYvma300tJwv_kO2v25lUS8-dAK6KW48i1o4HdHEyYytJquG-vpFr4EelPc6hI066uKQRhCbj6Ie1yOIPB1igelDHhRlraNA87MxXldFJorhpR7R5aRcEG1JouWeCHhyphenhyphenEEfzO3937XlmWwZa1fPun-JtRx_3_qPdIXwut9j0/s1280/flag-28561_1280.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="852" data-original-width="1280" height="264" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi71MNTlQ6KjOos3diGnloBYvma300tJwv_kO2v25lUS8-dAK6KW48i1o4HdHEyYytJquG-vpFr4EelPc6hI066uKQRhCbj6Ie1yOIPB1igelDHhRlraNA87MxXldFJorhpR7R5aRcEG1JouWeCHhyphenhyphenEEfzO3937XlmWwZa1fPun-JtRx_3_qPdIXwut9j0/w397-h264/flag-28561_1280.png" width="397" /></a></div><br /><p><br /></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-18172585317122039692023-12-05T11:29:00.003-06:002023-12-05T11:29:54.633-06:00Blake Madison Speaks to Alabama Chapter of the National Association of Tax Professionals<p>Blake A. Madison was honored to speak to the Alabama Chapter of the National Association of Tax Professionals at their annual Fall Continuing Education meeting on Monday, December 4, 2023, in Birmingham, Alabama.</p><p>Blake spoke for several hours providing the group with an update on the many developments in Alabama and federal tax law over the past year and provided some insight into what to look for in the upcoming 2024 tax year.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeu46G96JMWsOHD-fzJlobGX-2VFWG-4ZwosW2w_TVjn9Jhe83y0TXFpynKamNCv7KmpsM1nzhXu7oq3uc8S_mJlTA_0DJ634HbBwz_tSUFvsxRnbtrBA8lvBBn7LUFd5rQoAKFUdj6_WVX2Ilhg9DCavkyvp0XITXOHa6jNE6t2_A89hjNNlkxQrxirw/s379/Alabama%20NATP.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="255" data-original-width="379" height="215" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeu46G96JMWsOHD-fzJlobGX-2VFWG-4ZwosW2w_TVjn9Jhe83y0TXFpynKamNCv7KmpsM1nzhXu7oq3uc8S_mJlTA_0DJ634HbBwz_tSUFvsxRnbtrBA8lvBBn7LUFd5rQoAKFUdj6_WVX2Ilhg9DCavkyvp0XITXOHa6jNE6t2_A89hjNNlkxQrxirw/s320/Alabama%20NATP.png" width="320" /></a></div><br /><p><br /></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-90076837514411469112023-02-15T15:44:00.004-06:002023-02-15T15:44:55.804-06:00Talking Alabama Taxes on The JMF Advisors Podcast<p><span style="font-family: inherit;">I was h<span style="background-color: #fcfcfb; color: #241f21; white-space: pre-wrap;">onored to spend some time recently with Kim Smith and the good folks at </span><a style="background-color: #fcfcfb; color: #2f6b9a; cursor: pointer; outline: none 0px; white-space: pre-wrap;" tabindex="0">@JMFCPAs</a><span style="background-color: #fcfcfb; color: #241f21; white-space: pre-wrap;"> talking Alabama taxes on The JMF Advisors Podcast. To watch the podcast, click <a href="https://www.youtube.com/watch?v=6b5nhsLm2fg&t=3311s" target="_blank">here.</a></span></span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSKDqIt8-Rk1vHzMO5oUPt-dI4i-H45bF2F9xCbpITROprJnO3935s5uuZbZ1qYH2i7p0_Wc1emQpiiBZXxHi9f-gZeG0RCJODxTKChkODAA5LXyXORZ4f67zoHn0_XvdVfrHhCH_KD1jidTUWz01mrn6lrnqXrShLCxD970qobXy6yEEClctp5cmT/s1066/2019%20Chamber%20Headshot.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1066" data-original-width="750" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSKDqIt8-Rk1vHzMO5oUPt-dI4i-H45bF2F9xCbpITROprJnO3935s5uuZbZ1qYH2i7p0_Wc1emQpiiBZXxHi9f-gZeG0RCJODxTKChkODAA5LXyXORZ4f67zoHn0_XvdVfrHhCH_KD1jidTUWz01mrn6lrnqXrShLCxD970qobXy6yEEClctp5cmT/s320/2019%20Chamber%20Headshot.jpg" width="225" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-9s9PKUdM8a6QUWDG8bnc-JEprGXPDMQEfS65erpHb6gkpB_Hh3DolbqS77gYJwOQeDJ25DTtQEqSS0vj4CFxK_6_We3YRXBAXpfjjgJAVCISxO9z3-TXAUzfeOFUe8arOGVDldZVRNJjs1hmWT-28CXRe7gTgXw5LmIduFBmAJKXykrb-1GRZ0bq/s800/JMF_Logos.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="773" data-original-width="800" height="309" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-9s9PKUdM8a6QUWDG8bnc-JEprGXPDMQEfS65erpHb6gkpB_Hh3DolbqS77gYJwOQeDJ25DTtQEqSS0vj4CFxK_6_We3YRXBAXpfjjgJAVCISxO9z3-TXAUzfeOFUe8arOGVDldZVRNJjs1hmWT-28CXRe7gTgXw5LmIduFBmAJKXykrb-1GRZ0bq/s320/JMF_Logos.jpg" width="320" /></a></div><br /><span style="font-family: inherit;"><br /></span><p></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-22886667639087971172023-01-29T15:26:00.003-06:002023-01-29T15:26:59.804-06:00Alabama's 2023 Severe Weather Preparedness Sales Tax Holiday<p><span style="font-family: inherit;">Alabama's <span style="background-color: white; color: #252c32;">Severe Weather Preparedness Sales Tax Holiday begins Friday, February 24 and continues through Sunday February 26, 2023.</span></span></p><p><span style="background-color: white; color: #252c32;"><span style="font-family: inherit;">For a listing of exempt items, click <a href="https://www.revenue.alabama.gov/ultraviewer/viewer/basic_viewer/index.html?form=2022/10/Severe_Weather_Sales_Tax_Holiday_Fact_Sheet_2023.pdf" target="_blank">here.</a></span></span></p><p><span style="font-family: inherit;">Not all cities and counties participate in the annual tax holiday. For a list of those that are and are not participating, click <a href="https://www.revenue.alabama.gov/sales-use/alabama-severe-weather-preparedness-sales-tax-holiday/" target="_blank">here.</a></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBQmpCXLoQRzvD0_ACTUxS5ZbpY4ROFz0HQT-vsSL2C-WD0Prof7WchZ0qYPw0DFtml8h5THP6UN5Goh26YmFs0L4XxsNKjQOjSiJYIq8Mu6tKNU4B1JeH09O-Ylsdc8cOielCob99veQcVKB-45ynrHl4TmmtPt-4M50CQucHlhqNyEDsvICLaKRb/s1280/Tornado.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1280" data-original-width="966" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBQmpCXLoQRzvD0_ACTUxS5ZbpY4ROFz0HQT-vsSL2C-WD0Prof7WchZ0qYPw0DFtml8h5THP6UN5Goh26YmFs0L4XxsNKjQOjSiJYIq8Mu6tKNU4B1JeH09O-Ylsdc8cOielCob99veQcVKB-45ynrHl4TmmtPt-4M50CQucHlhqNyEDsvICLaKRb/s320/Tornado.png" width="242" /></a></div><br /><p><br /></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-75147731082002308822023-01-19T09:18:00.002-06:002023-01-19T09:52:03.832-06:00Tax Tribunal Once Again Confirms Broad Application of Reduced Machine Rate<p> </p><p class="MsoNormal" style="margin-top: 0.25in; text-align: justify;"><span style="font-family: inherit;">Businesses would be wise to review their operations to determine if they are missing possible tax savings by using the reduced tax rate. </span>The Alabama Tax Tribunal confirmed, once again, that the reduced machine rate for sales and use tax should be very broadly applied. </p><p class="MsoNormal" style="margin-top: 0.25in; text-align: justify;"><span style="font-family: inherit;">In </span><b style="font-style: italic;">United Launch Alliance, LLC v. State of
Alabama Department of Revenue; </b>Docket No. S. 18-1033-JP; Opinion and Preliminary
Order dated December 21, 2021, the Tax Tribunal's <span style="text-align: justify;">opinion reversed the Department of
Revenue’s decision to partially deny a refund request. The Taxpayer purchased helium
and nitrogen from a chemical supplier for use in Taxpayer’s rocket manufacturing
facility. The Taxpayer paid state sales tax on the gas purchases at the general
rate of 4%. The Taxpayer and the chemical supplier jointly petitioned the
Department for a sales tax refund; arguing that the helium and
nitrogen purchased qualified as machines that were used in the manufacture of
tangible personal property and thus should have been taxed at the reduced
machine rate of 1.5% under </span><i style="text-align: justify;">Ala. Code </i><span style="text-align: justify;">§ 40-23-2(3).</span></p>
<p class="MsoNormal" style="text-align: justify;">The Tribunal discussed a slew of cases
explaining that, for example, the “definition of machinery itself is broad
enough to cover anything from a peanut-roasting outfit on Main Street to a
blast furnace in Pittsburgh.” <i>State v. G.T. Taylor</i>, 80 So. 2d 618,
621-22 (Ala. 1954). The Tribunal discerned the crucial elements for machinery
classification to be that the “machinery” was essential in manufacturing
tangible personal property and that the “machinery” performed integral,
distinct, and independent functions in the manufacturing process. In the
Taxpayer’s case, the helium and nitrogen were used in essential testing to
ensure that Taxpayer’s rockets were launch-worthy. These tests were required to
be performed—and completed successfully—before a rocket could be shipped to a
launch site. The Tribunal noted that the gases did not directly convert raw
materials into rockets and that the Alabama statute did not require that.
Instead, the statute requires that an item be a “machine[] used
in…manufacturing of tangible personal property” to qualify for the machine
rate. The Tribunal held that the gases qualified for the 1.5% machine rate in
this instance and reversed the Department’s denial of the refund
claim.</p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-54605076800659980772023-01-09T10:32:00.002-06:002023-01-09T10:32:52.830-06:00New exemption for state portion of ad valorem tax on business personal property<p> </p><span style="font-family: inherit;"><b>Effective as of October 1, 2023</b>, Act
2022-53 –<b> </b>the Small Business Relief and Revitalization Act of 2022 - sponsored by Rep. Danny Garrett (R – Trussville), among other things, exempts
up to $40,000 of <span style="background-color: white;">business personal property from the state-levied ad valorem tax. </span></span><div><span style="font-family: inherit;"><span style="background-color: white;"><br /></span></span></div><div><span style="font-family: inherit;"><span style="background-color: white;">The new law also</span> grants municipalities and counties the option to adopt the same exemption
by resolution or ordinance, although few, if any, are expected to do so.</span></div><div><br /></div><div><span style="font-family: inherit;">This change effectively
exempts 75% of Alabama businesses from payment of the state portion of this tax.<br /></span><div><span style="font-family: inherit;"><br /></span></div><div><span style="font-family: inherit;">For the detailed legislation, click <a href="https://arc-sos.state.al.us/ucp/L0888225.AI1.pdf" target="_blank">here.</a></span></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGgsbd6Jm_kCI3tNnzhm9LQiZVTorkcR_3EiKg7_78E8rFvoKzti2k9TD_TE8bB14BuNUiUCyVvC7cn13b7N-AgcwE_FHPP0AZVLM1MIbcA1IG5JLlcwmdyNW2rmBs0cCWIZg9-rn2xDt7u47eFyXX1jiAqNCcW1I0e0STHhy57_WUKaO3ZmHlnaBH/s1280/important.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="912" data-original-width="1280" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGgsbd6Jm_kCI3tNnzhm9LQiZVTorkcR_3EiKg7_78E8rFvoKzti2k9TD_TE8bB14BuNUiUCyVvC7cn13b7N-AgcwE_FHPP0AZVLM1MIbcA1IG5JLlcwmdyNW2rmBs0cCWIZg9-rn2xDt7u47eFyXX1jiAqNCcW1I0e0STHhy57_WUKaO3ZmHlnaBH/s320/important.png" width="320" /></a></div><br /><span style="font-family: inherit;"><br /></span></div></div>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-36998745247524542382023-01-09T10:02:00.002-06:002023-01-09T10:04:34.524-06:00More retirement plan income now exempt from income tax in Alabama<p><span style="font-family: inherit;">Act 2022-294, sponsored by Rep. Lynn Greer (R-Rogersville), beginning January 1, 2023, exempts
from state income tax up to $6,000 in taxable retirement income for people age 65
and older. </span></p><p><span style="font-family: inherit;">The new exemption applies to
withdrawals from 401(k)-type accounts and individual retirement accounts, known
as defined contribution retirement plans. Income from traditional pensions, called
defined benefit plans, has been exempt from Alabama’s state income tax for
decades, including those from both public and private employers.</span></p><p><span style="font-family: inherit;">To see details in the legislation, click </span><a href="http://alisondb.legislature.state.al.us/ALISON/SearchableInstruments/2022RS/PrintFiles/HB162-enr.pdf" style="font-family: inherit;" target="_blank">here.</a></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtcgyljI-GdrCSxT9GaU-DABMr4U6OLalzXbZnYwW9G7DWUwU2Ry6bN5SDkUD2wp1TkS2ACJ797gnD4ACJ-TcFK9uk5vYutiA2AbPYKsAbZF4mxXG5uaM2Sqwh9bLNtwDgOR3BwdxZeWTK2jbRwIic2R93ySjPh4qtw-OLbenlIsSjTuLxU3lQ1TLi/s819/retire%201.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="671" data-original-width="819" height="262" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtcgyljI-GdrCSxT9GaU-DABMr4U6OLalzXbZnYwW9G7DWUwU2Ry6bN5SDkUD2wp1TkS2ACJ797gnD4ACJ-TcFK9uk5vYutiA2AbPYKsAbZF4mxXG5uaM2Sqwh9bLNtwDgOR3BwdxZeWTK2jbRwIic2R93ySjPh4qtw-OLbenlIsSjTuLxU3lQ1TLi/s320/retire%201.jpg" width="320" /></a></div><br /><p><br /></p><p></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-49416494614114060402023-01-09T09:46:00.002-06:002023-01-09T09:48:20.110-06:002023 Brings Changes to Alabama's Business Privilege Tax<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMQQ182q9oCzduSbwjwBUDwcyjlu8d1XNmfsOF3sBjatFUFrEEAczjsWlyu2Rlqcalcu9ieyBaBeV114q9dgjAzd4dBpU56RcflOYV47ZbBXkX1IMnNFZ2CwEmCwRAwgD8eC4f_CIU-gbmTkwlgT0euwXREWKZ30btQGS5akdUxcbA79-6gkyXqhZz/s640/Downward.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="640" height="254" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMQQ182q9oCzduSbwjwBUDwcyjlu8d1XNmfsOF3sBjatFUFrEEAczjsWlyu2Rlqcalcu9ieyBaBeV114q9dgjAzd4dBpU56RcflOYV47ZbBXkX1IMnNFZ2CwEmCwRAwgD8eC4f_CIU-gbmTkwlgT0euwXREWKZ30btQGS5akdUxcbA79-6gkyXqhZz/w254-h254/Downward.png" width="254" /></a></div><br /> As the calendar turns to 2023, changes passed by the Alabama Legislature in 2022 to the business privilege tax also begin to take effect.<p></p><p><span style="font-family: inherit;">Act 2022-282, sponsored by Rep. Steve Clouse (R-Ozark), lowers the minimum business
privilege tax from $100 to $50 for the taxable year beginning in 2023. Under prior law, the minimum
business privilege tax due for certain corporations, business trusts, limited
liability entities, and disregarded entities was not less than $100. </span></p><p><span style="font-family: inherit;">More importantly, the legislation eliminates the minimum business privilege tax after December
31, 2023.</span></p><p><span style="font-family: inherit;">To read the legislation, click <a href="https://arc-sos.state.al.us/ucp/L0924472.AI1.pdf" target="_blank">here.</a></span></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-48148512184632686152021-03-24T14:52:00.001-05:002021-03-24T14:52:33.011-05:00Beware - That Alabama Filing Extension May Cost You<p><span data-offset-key="2f4a2-0-0"><span data-text="true">Alabama individual taxpayers beware! While the due date for your Alabama income tax return has been extended to May 17th, unless Alabama law is changed, you will pay interest on any tax payments made after April 15th. The Alabama Legislature may address the situation, but be forewarned if no corrective legislation is passed.</span></span></p><p><span data-offset-key="2f4a2-0-0"></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiNBLCwFd-4cZj8NfKwa1guClpT7fsLQRtabxMk4dJLuODqwK_9f6q4lM2kexVV9g4JtoWkBrqsIdfiOdxmJBz2e4AIY9VJyjk4CyL-6h8ZNhlzsByqnmFKuG9Yd0KCG99K16z2uWyhQY/s960/caution.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="960" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiNBLCwFd-4cZj8NfKwa1guClpT7fsLQRtabxMk4dJLuODqwK_9f6q4lM2kexVV9g4JtoWkBrqsIdfiOdxmJBz2e4AIY9VJyjk4CyL-6h8ZNhlzsByqnmFKuG9Yd0KCG99K16z2uWyhQY/s320/caution.png" width="320" /></a></div><br /><span data-text="true"><br /></span><p></p>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-60735627860753479922020-07-17T09:25:00.000-05:002020-07-17T09:25:08.760-05:00"Back-to-school" Sales Tax Holiday This WeekendIt remains to be seen how many Alabama school children will actually be in classrooms this fall due to the ongoing pandemic, however Alabama's annual <b>sales tax holiday</b> for
school-related items for 2020 begins <u><b>today </b></u>and runs through the weekend, ending at midnight on Sunday, July 19th. For details on what goods are exempt, <a href="https://revenue.alabama.gov/wp-content/uploads/2017/05/STHolidayQuickRefSheet20.pdf" target="_blank">click here.</a><br />
<br />
If you are curious which cities and counties are participating in this year's sales tax holiday, then <a href="https://revenue.alabama.gov/sales-use/sales-tax-holidays/alabama-back-to-school-sales-tax-holiday-participating-localities/" target="_blank">check here.</a>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-38327371713722303442019-06-24T14:53:00.002-05:002019-06-24T14:56:52.903-05:00Alabama's 2019 Back-To-School Sales Tax Holiday is July 19-21<br />
Hard to believe it, but Alabama's annual <b>sales tax holiday</b> for school-related items for 2019 will be here soon. Set your calendar for July 19-21 this year. For details on what goods are exempt, <a href="https://revenue.alabama.gov/wp-content/uploads/2017/05/STHolidayQuickRefSheet19.pdf" target="_blank">look here.</a><br />
<br />
If you are curious which cities and counties are participating in this year's sales tax holiday, then <a href="https://revenue.alabama.gov/sales-use/sales-tax-holidays/alabama-back-to-school-sales-tax-holiday-participating-localities/" target="_blank">check here.</a><b></b><i></i><u></u><sub></sub><sup></sup><strike></strike>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-25260806676734757672019-06-23T16:02:00.001-05:002019-06-24T14:40:28.821-05:00Alabama Department of Revenue Issues Guidance on Taxability of Software<div style="text-align: justify;">
The Alabama Department of Revenue recently released its initial guidance on the taxability of sales of computer software in light of the Alabama Supreme Court's decision in <i>Ex parte Russell County Community Hospital </i>(May 17, 2019). The Department's initial guidance can be found <a href="https://revenue.alabama.gov/2019/06/19/ador-issues-guidance-on-taxability-of-computer-software/" target="_blank">here.</a></div>
<div style="text-align: justify;">
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The Alabama Supreme Court's decision can be found <a href="https://drive.google.com/file/d/1k81j57LMTkzt0XPWslJpBW8va6sfAvIr/view?usp=sharing" target="_blank">here.</a></div>
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In the Court's plurality opinion, the Court held that the hospital was not entitled to the refund of sales taxes claimed on the purchase of computer software. While the majority of the justices concurred in this conclusion, only two actually participated in the main opinion that also concluded that all software, whether canned or customized is subject to sales tax in Alabama. That conclusion stands in contrast to the Court's previous decision in <i>Wal-Mart Stores, Inc. v. City of Mobile</i>, 696 So.2d 290 (Ala. 1996), in which it held that customized software was not subject to sales tax. To be clear, the Court here, while refusing to distinguish between canned and custom software, did state that charges for services for "determining a particular software user's needs, designing and programming new software for a particular user, modifying or configuring existing software programs to meet a particular user's needs, installing software, and training users to operate software," if separately stated and invoiced, are nontaxable.</div>
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It remains to be seen how the Alabama Department of Revenue alters its longstanding regulation on this issue in light of the decision in <i>Ex parte Russell County Community Hospital</i>. We expect that the Department will work in the near future to rewrite Regulation 810-6-1-.37, which currently indicates that customized software is not subject to sales tax. So, stay tuned for more on this in the coming months.</div>
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<br />Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-36832188161493239962019-01-07T14:56:00.004-06:002019-01-07T14:56:49.636-06:00Blake Madison Quoted in State Tax Notes ArticleRecently, <em>State Tax Notes</em> published an article regarding the progress made in Alabama's judicial system in the handling of tax cases. Rosen Harwood's Blake A. Madison is quoted several times in the article. <br />
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For a look at the article, click <a href="https://drive.google.com/file/d/1ez_IN2VgkYH0Osg27ReLkqn7vF5vlIiq/view?usp=sharing" target="_blank">here.</a>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-5713949850230642502018-11-21T11:05:00.000-06:002018-11-21T11:05:21.153-06:00Alabama Court of Civil Appeals Confirms Denial of Sales Tax Refund on Software Purchase
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;">In 2016, former Chief Judge Bill
Thompson of the Alabama Tax Tribunal held that the taxpayer-hospital (Russell County Community Hospital, LLC) was
entitled to a refund of the sales tax paid on the purchase of software that it contended was
customized for its particular functions. <span style="mso-spacerun: yes;"> </span>The hospital contracted with a well-known
healthcare management company to provide the hospital with various computer
software programs. <span style="mso-spacerun: yes;"> </span>The vendor started
with canned software, and then arguably customized it to meet the specific
needs of the hospital. <span style="mso-spacerun: yes;"> </span>The hospital paid
sales tax to the company on the software, and the hospital and the company
later jointly petitioned for a refund, which was denied by the Department.</span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;">In ruling for the taxpayer, the Tax
Tribunal relied heavily on the Alabama Supreme Court’s decision in <i>Wal-Mart
Stores, Inc. v. City of Mobile and County of Mobile</i>, 696 So 2d 290 (Ala.
1996), which held that unmodified, “canned” computer software sold to nonexempt
customers was subject to Alabama and local sales or use tax. <span style="mso-spacerun: yes;"> </span>Following that ruling, the Department issued Regulation
810-6-1-.37 (the “Regulation”), which the Department cited in support of its
refund denial. <span style="mso-spacerun: yes;"> </span>Judge Thompson found the
Regulation to be internally inconsistent.</span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;">Paragraph (5) of the Regulation
states that software is entirely exempt from sales tax if it is customized, but
the same paragraph also states that only the itemized charges for customizing
the software are exempt from sales tax. <span style="mso-spacerun: yes;"> </span>The
Department had denied the joint petition in issue because the charges to the
hospital were not itemized between the canned software and the customized
portion. <span style="mso-spacerun: yes;"> </span>Judge Thompson added a footnote
explaining that it is extremely difficult to determine whether software is
custom or canned and that he would support the imposition of sales tax on all
software.</span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;">Apparently relying on Judge
Thompson’s footnote, the Department argued on appeal to the Russell County
Circuit Court that sales tax should apply to the purchase of <i>all </i>software,
whether canned or customized. <span style="mso-spacerun: yes;"> </span>This position,
if it had been adopted, would not only have removed the court‑mandated
exemption for custom software, but would have also meant that the Department
was disavowing its own regulation, which specifies that custom software is not
subject to sales tax.</span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;">On January 26, 2018, the Circuit
Court affirmed the Department’s denial of the refund request and thus reversed
the Tax Tribunal. <span style="mso-spacerun: yes;"> </span>The Circuit Court
ruled that it was not custom software programming because the CEO of Medhost
testified that none of the software was custom, rather the software was
prefabricated and could be configured to a particular customer’s needs at their
location, and the configurations did not require the dispatching of programmers
to the hospital. <span style="mso-spacerun: yes;"> </span>Importantly, the
Circuit Court did not address Judge Thompson’s footnote or the Department’s new
argument in support of imposing sales tax on all software.</span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;"></span><br />
<span style="mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin;">The Alabama Court of Civil Appeals has now weighed in and its decision, found <a href="https://drive.google.com/file/d/10N-Ki4PtBum0I3nV1G0Je7LaXPUTLOct/view?usp=sharing" target="_blank">here,</a> affirms the decision of the trial court. Readers should carefully watch to see if this case is taken by the Alabama Supreme Court to further clarify its past rulings on the taxability of sales of computer software.</span><br />
Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-51424940758488574022018-09-10T11:48:00.001-05:002018-09-10T11:48:28.413-05:00Alabama Court of Civil Appeals Upholds Scholastic Book Clubs Victory<br />
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<span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">The Alabama Court of Civil
Appeals has upheld the decision of the Montgomery County Circuit Court that Scholastic Book Clubs, Inc. was not subject to Alabama use tax during the assessment period. The Circuit Court had overturned the previous decision of the Alabama Tax Tribunal finding liability for Alabama use taxes.</span></div>
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<span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">The facts in the case are similar in nature to other Scholastic Book Clubs cases throughout the country. In this decision, it is important to note that this is <u>not</u> a nexus decision, as one might assume.<span style="mso-spacerun: yes;">
</span>First, it is notable that the Court focused specifically on the years at issue in the
contested assessment, which were all pre-<i style="mso-bidi-font-style: normal;">Wayfair</i>.<span style="mso-spacerun: yes;"> </span>Second, a careful reading of the opinion
could lead one to conclude that the Court might have rendered a different
decision had the Alabama Department of Revenue made some different
arguments.<span style="mso-spacerun: yes;"> </span>Instead, the Court concluded
that the Department failed to present evidence that Scholastic Book Clubs’
activities subjected it to a statutory obligation to collect and remit Alabama use
tax.<span style="mso-spacerun: yes;"> </span>Thus, the Court determined
that it did not need to address the issue of nexus. <o:p></o:p></span></div>
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<span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;"><span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">Importantly, the Court
specifically noted that it was not ruling on the “permissible reach of Alabama’s
taxing authority under <i style="mso-bidi-font-style: normal;">Wayfair</i>….”<span style="mso-spacerun: yes;"> </span>It also expressly stated that it was not
ruling on the impact of the enforcement of the Department’s nexus rule
beginning on October 1, 2018, which arguably would impose a tax obligation on
Scholastic Book Clubs prospectively.<span style="mso-spacerun: yes;"> </span>Those
battles remain to be waged, no doubt. However,
the Court avoided the temptation to wade into those issues given the facts and
law before it.<o:p></o:p></span></span></div>
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<span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;"><span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">In a post-<i style="mso-bidi-font-style: normal;">Wayfair</i> environment, given the facts in this case, it is entirely
possible that the outcome could be different.</span></span></div>
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<span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;"><span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;"></span></span> </div>
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<span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;"><span style="font-family: "century" , serif; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi;">To read the Court's decision, click <a href="https://drive.google.com/file/d/1NkCGvYoWqNCr8hcy362e3Q-q1RwHSOpo/view?usp=sharing" target="_blank">here.</a></span></span></div>
Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-78939093131778147482018-07-02T14:37:00.000-05:002018-07-02T14:38:12.906-05:00Alabama's 2018 Back-To-School Sales Tax Holiday is July 20-22<h2>
<span style="font-size: small;">Alabama's 2018 Back-To-School Sales Tax Holiday is July 20-22</span></h2>
After Alabama lawmakers decided last year to move up the dates to July, Alabama's annual sales tax holiday for school-related items for 2018 is set for July 20-22. For details on what goods are exempt, <a href="https://revenue.alabama.gov/wp-content/uploads/2017/05/STHolidayQuickRefSheet18.pdf" target="_blank">click here.</a><br />
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If you are curious which cities and counties are participating in this year's sales tax holiday, then <a href="https://revenue.alabama.gov/sales-use/sales-tax-holidays/alabama-2018-back-to-school-sales-tax-holiday-participating-localities/" target="_blank">click here.</a>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-11865331844244355382018-05-18T11:03:00.002-05:002018-06-29T14:57:57.959-05:00Alabama's 2018 Tax Amnesty Program Starts July 1<h2>
<span style="font-size: small;">Alabama's 2018 Tax Amnesty Program Starts July 1</span></h2>
The 2018 version of the Alabama Tax Amnesty Program is almost upon us. The Alabama Department of Revenue has recently issued a notice setting out the details of the program. You can find the notice <a href="https://revenue.alabama.gov/wp-content/uploads/2018/05/180511_REL_TaxAmnestyWebsite.pdf" target="_blank">here.</a> The potential for a waiver of interest and penalties exists for participants in the program.<br />
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If you would like assistance pursuing amnesty under the 2018 program, which runs from July 1 - September 30, 2018, please contact us.Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-49099094387108711252018-05-18T10:25:00.000-05:002018-05-18T10:25:24.131-05:00Alabama Tax Tribunal Rebuffs "Kill Quill" Efforts
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<span style="font-family: "Century",serif;">On May 11, 2018, the Alabama Tax Tribunal
entered an Opinion and Preliminary Order in <em>Newegg, Inc. vs. Alabama Department of Revenue</em>, 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 <i>Quill</i> 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. <o:p></o:p></span></div>
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<span style="font-family: "Century",serif;">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.<o:p></o:p></span></div>
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<span style="font-family: "Century",serif;">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 <i>Quill</i> or
Congress decides to finally take action on the issue.</span></div>
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<span style="font-family: "Century",serif;">A copy of the Opinion and Preliminary Order can be found <a href="https://drive.google.com/file/d/1WojeMt5HpoFf0uFaaFL5lgmvj6lQPtCN/view?usp=sharing" target="_blank">here.</a></span></div>
Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-48988751746366776752017-12-01T08:42:00.001-06:002017-12-01T08:43:20.823-06:00Proposal for More Road Money in Limestone CountyThe drumbeat for more money for road and infrastructure work in Alabama has been growing over the past few years. Unfortunately, little, if any progress has been made on that front on the state and federal levels. Recently, local jurisdictions have begun to realize that they will likely have to find ways to fund road work themselves.<br />
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A Limestone County Commissioner has a few ideas for increasing road work funding in his area. To see more about his ideas, look <a href="http://www.decaturdaily.com/news/limestone_county/limestone-commissioner-proposing-options-for-more-road-money/article_b1a19026-54df-5a9e-a9da-850b8a922202.html" target="_blank">here.</a>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-15278116911088467932017-12-01T08:35:00.002-06:002017-12-01T08:35:43.092-06:00Dale County Judge Issues Injunction in Tax DisputeA Dale County Circuit Court judge has issued a preliminary injunction barring local tax money collected in Dale County from being transferred to school systems in Dothan and Enterprise (located outside of Dale County) to fund students from Dale County attending schools there. The injunction is in place until a January 10 hearing on the matter.<br />
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The Dale County Schools, Ozark City Schools, and Daleville City Schools filed the lawsuit after the Alabama Department of Education notified Dale County Revenue Commissioner Eleanor Outlaw that she should distribute some Dale County tax revenues to Enterprise and Dothan.<br />
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For more details, look <a href="http://www.dothaneagle.com/news/education/dale-county-judge-issues-injunction-in-tax-dispute/article_d7e74bb2-d556-11e7-9d70-33387daf760f.html" target="_blank">here.</a>Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-18937989673053140922017-12-01T08:28:00.002-06:002017-12-01T08:28:36.860-06:00Selma City Council Wisely Backs Away From Decision to Pursue Sales Tax IncreaseThe Selma City Council, which recently went on record supporting a 1% sales tax increase, has wisely rescinded its support for such an increase. If the increase had moved forward, Selma residents would have paid an astounding 11% total combined sales tax rate on goods purchased in the city. That would be much higher than the average rate of approximately 9% across Alabama. <br />
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For more on the Selma Council's flip-flop, look <a href="http://www.selmatimesjournal.com/2017/11/30/council-rescinds-motion-supporting-sales-tax-increase/" target="_blank">here</a>.Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-38371273285837625412017-12-01T08:20:00.002-06:002017-12-01T08:20:55.918-06:00Lowndes County, Alabama Voters to Decide on Renewal of Property TaxAs detailed <a href="https://www.alabamanews.net/2017/11/30/lowndes-county-school-tax-renewal-vote-dec-12th/" target="_blank">here,</a> on December 12th, in addition to voting for Alabama's next U.S. Senator, voters in Lowndes County, Alabama will be voting to renew three separate property tax measures totaling only seven mills of tax. Those taxes are earmarked for education in Lowndes County.Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com1tag:blogger.com,1999:blog-8520658446875475131.post-53391354847247182142016-08-02T08:52:00.000-05:002016-08-02T08:52:10.688-05:00Sales Tax Holiday for Back-To-School is This WeekendIt's that time of year again in the sunny south when the temperature hovers around 100 degrees daily and the humidity almost feels like a steam shower. Oh yeah, it's also time for kids to return to school in Alabama. Hard to believe, but many school systems begin their school year in the next week. For that reason, Alabama's now annual Back-to-School Sales Tax Holiday is scheduled for this coming weekend, August 5-7.<br />
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As part of the holiday, state sales taxes, and the sales taxes of many local jurisdictions, are waived on the purchase of certain specified goods,<span style="font-size: small;"> including items such as clothing, sports equipment, computers, and school supplies. </span>This year, the Alabama Department of Revenue reports that 293 local taxing jurisdictions are participating in the tax holiday.<br />
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For a complete list of the goods that can be purchased tax free and the local jurisdictions participating in the tax holiday this year, <a href="http://revenue.alabama.gov/salestax/SalesTaxHol.cfm" target="_blank">click here.</a><br />
Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-71983836142354929712016-05-13T09:57:00.000-05:002016-05-13T09:57:13.415-05:00Bad Caribbean Boat Cruise Has Positive Outcome Before Alabama Tax TribunalThe Alabama Tax Tribunal recently decided the case of <em>DBI Marine Properties, LLC v. Alabama Department of Revenue</em>. For the Final Order, click <a href="https://drive.google.com/file/d/0B1AfdfyyqbL5QkNNd0ZabTAwalU/view?usp=sharing" target="_blank">here.</a> <br />
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In that case, the ADOR was attempting to impose Alabama use tax on the purchaser of a 68 foot Hatteras 68 Convertible boat. The boat was delivered to the taxpayer in New Bern, North Carolina, where additional equipment was installed on the vessel. Once seaworthy, the boat was scheduled to be used as a charter fishing vessel in the Caribbean. Unfortunately, on its initial voyage, the boat developed mechanical difficulties and had to be returned to the manufacturer for repairs. Apparently, at some point in the return process, it was briefly moored in Alabama.<br />
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The Tax Tribunal accurately determined that because the boat was purchased for first use outside of Alabama, and because there was no evidence that the vessel was ever substantially used in Alabama's waters, the Alabama use tax could not apply.Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0tag:blogger.com,1999:blog-8520658446875475131.post-76627973394510554312016-05-11T16:36:00.003-05:002016-05-11T16:36:39.824-05:00Reminder on Tax Exemption Available for Alabama Churches and Noprofits<div class="post-header">
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<span style="font-family: "Century","serif";">Alabama is one of only a handful of states that imposes its sales and use taxes on churches.<span style="mso-spacerun: yes;"> It also imposes sales and use taxes on most nonprofit entities. In addition, i</span>t imposes utility and mobile telecommunications taxes on churches and nonprofit entities.<span style="mso-spacerun: yes;"> </span>Ironically, it does exempt churches from income and ad valorem property taxes, but no express exemption exists from sales, use, utility, or mobile telecommunications taxes.</span><br /><br /><span style="font-family: "Century","serif";">We can argue about whether it is proper to impose taxes on such charitable organizations, many of which are serving to relieve some of the burdens of state and local governments to provide services to those less fortunate. Argument can be made that all Alabama churches should be exempt, as are churches in most states, from all state and local taxes. A few brave souls would argue that churches should not be exempt from tax at all. Regardless of your position, Alabama made the choice long ago not to provide such a general exemption from several of its taxes for Alabama churches and most of its nonprofit entities.</span><br /><br /><span style="font-family: "Century","serif";">There is, however, at least one option by which Alabama churches and nonprofit entities can obtain exemption from state and local sales, use, utility, and mobile telecommunications taxes and save significant money to use in their charitable works.</span><br /><br /><span style="font-family: "Century","serif";">Alabama churches and nonprofit entities have the option of forming a united appeal fund, which can not only bolster the organization's benevolent work, but also allow it to become exempt from all Alabama taxes, including sales, use, utility, and mobile telecommunications taxes. This can result in a substantial savings to the overall annual budget of the organization (almost immediately if a building or renovation project is to be undertaken soon or other large dollar purchase is about to take place), especially when you consider that combined sales and use tax rates are at or above 10% in some jurisdictions in Alabama. For more information on the united appeal fund process, call us or click <a href="https://drive.google.com/file/d/0B1AfdfyyqbL5akx1YTBJSHhrSGs/view?usp=sharing" target="_blank">here.</a></span><br /><br /><span style="font-family: "Century","serif";">Two separate Alabama Department of Revenue Administrative Law Division cases have upheld the use of a united appeal fund structure in this manner previously and many churches and charities across Alabama have chosen to establish united appeal funds to benefit their activities.</span><br /><br /><span style="font-family: "Century","serif";">While united appeal funds are not for every church or charity, at least some churches and charities do have an option to obtain exemption under Alabama law.<o:p></o:p></span></div>
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Blake A. Madisonhttp://www.blogger.com/profile/08932912872462811197noreply@blogger.com0