Tuscaloosa Board of Education Votes to Sue Alabama Over Internet Sales Tax

The Tuscaloosa City Schools Board of Education has voted unanimously to sue the state of Alabama over how online sales tax is collected and distributed, one week after the city council took a similar action.

As the Thread first reported, the city council approved a municipal lawsuit against Alabama last week over the Simplified Sellers' Use Tax, which took effect in 2016 and charges 8 cents on the dollar for online purchases.

Mayor Walt Maddox has led the campaign and said the current tax structure disenfranchises local businesses and will see the city of Tuscaloosa "lose" $14.6 million this fiscal year alone. That number continues to grow each year, driven by the surging popularity of online shopping, not only from Amazon and other giants, but also through grocery and takeout delivery sites and apps.

While the city only receives pennies on the dollar from a purchase made on Walmart.com and delivered locally as opposed to an identical in-person buy from the Supercenter on Skyland Boulevard, the situation is even worse for the school system.

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TCS CFO Jay Duke said they receive nothing at all from internet sales tax revenue and, again, as online shopping becomes more and more prevalent, the impact is felt more deeply.

"That translates into about $5 million a year that we are not getting because we are not getting anything on the SSUT tax," Duke said. "We get zero from internet sales tax."

After hearing from their newest board member and local attorney Clint Mountain in a Tuesday night meeting, the school board unanimously voted to move forward with legal action to either change the policy or at least shed light on the problem, allowing a solution to emerge from another avenue.

"The first point is that the city of Tuscaloosa is moving forward with this with or without us, and our participation or approval here makes sure that, win, lose, or draw, we will have a seat at the table," Mountain said. "Whether or not it will be successful, I don't know. It's a very, very complicated issue and it has to do a lot more with the statutory construction of how these funds are collected and distributed, and it may not be as simple as filing a lawsuit. It may end up taking a lawsuit to bring attention to it, and then lobbying work and something done at the legislative level if [the lawsuit] is not successful, but this is certainly the first step and I think the correct step to take."

Outgoing Superintendent Mike Daria celebrated the vote in a statement on Wednesday to the Thread.

"Tuscaloosa City Schools, like many public school systems across Alabama, currently receives no portion of sales tax revenue generated from online purchases. As consumer behavior continues to shift toward digital commerce, our tax structure must evolve accordingly to ensure that school systems are not left behind," Daria said. "Last night, the Tuscaloosa City Board of Education unanimously authorized its legal counsel to initiate litigation concerning the distribution of online sales tax revenue. This decision was made after thorough deliberation and with the singular goal of ensuring a fair and just funding structure that supports student achievement and long-term success."

For more coverage of the lawsuit or suits as they are filed, and for other news from across West Alabama, stay connected to the Tuscaloosa Thread.