SB 307

Under current law, the Simplified Sellers Use Tax Remittance Program allows an eligible seller to voluntarily participate in the program and collect and remit simplified sellers use tax

This bill updates the conditions of remote entity nexus to allow an out-of-state vendor with physical presence established only through acquisition of an in-state company the ability to participate in the Simplified Sellers Use Tax Program. This bill clarifies certain sales of tangible personal property cannot be reported under the program and are subject to sales tax

This bill would authorize marketplace facilitators to collect and remit simplified sellers use tax on Alabama sales made by or on behalf of third party marketplace sellers

To amend Sections 40-23-190 and 40-23-191 Code of Alabama 1975, relating to remote entity nexus and simplified sellers use tax; to allow an out-of-state vendor with physical presence established only through acquisition of an in-state company the ability to participate in the Simplified Sellers Use Tax Program; and to authorize marketplace facilitators to collect and remit simplified sellers use tax.

Section 1

Sections 40-23-190 and 40-23-191, Code of Alabama 1975, are amended to read as follows:

§40-23-190.

(a) An out-of-state vendor has substantial nexus with this state for the collection of both state and local use tax if:

(1) The out-of-state vendor and an in-state business maintaining one or more locations within this state are related parties; and

(2) The out-of-state vendor and the in-state business use an identical or substantially similar name, tradename, trademark, or goodwill, to develop, promote, or maintain sales, or the in-state business and the out-of-state vendor pay for each other's services in whole or in part contingent upon the volume or value of sales, or the in-state business and the out-of-state vendor share a common business plan or substantially coordinate their business plans, or the in-state business provides services to, or that inure to the benefit of, the out-of-state business related to developing, promoting, or maintaining the in-state market.

(b) An out-of-state vendor that is an eligible seller participating in the Simplified Sellers Use Tax Remittance Program, as these terms are defined in Section 40-23-191, that establishes a physical presence in this state only through the acquisition of an in-state business that thereafter meets the provisions of subsection (a) may elect to satisfy its requirements to collect and remit tax for its Alabama sales by continued participation in the Simplified Sellers Use Tax Remittance Program. The out-of-state vendor may not thereafter collect and remit through the Simplified Sellers Use Tax Remittance Program taxes imposed by Chapter 23 of Title 40, or any local law or municipal ordinance, or any county ordinance enacted pursuant to Section 40-12-4 imposing a sales tax, for those sales of tangible personal property which are sold or removed from or at a retail location in this state or delivered at a retail location in this state.

(b) (c)Two entities are related parties under this section if one of the entities meets at least one of the following tests with respect to the other entity:

(1) One or both entities is a corporation, and one entity and any party related to that entity in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code owns directly, indirectly, beneficially, or constructively at least 50 percent of the value of the corporation's outstanding stock;

(2) One or both entities is a limited liability company, partnership, estate, or trust and any member, partner, or beneficiary, and the limited liability company, partnership, estate, or trust and its members, partners, or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the profits, or capital, or stock, or value of the other entity or both entities; or

(3) An individual stockholder and the members of the stockholder's family, as defined in Section 318 of the Internal Revenue Code, owns directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the value of both entities' outstanding stock.

§40-23-191.

(a) This part shall be titled The Simplified Seller Use Tax Remittance Act.

(b) For the purpose of this part, the following terms shall have the respective meanings ascribed to them in this section:

(1) DEPARTMENT. The Alabama Department of Revenue.

(2) ELIGIBLE SELLER. An individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or other legal entity A seller that sells tangible personal property or a service, but does not have a physical presence in this state or is not otherwise required to collect and remit state and local sales or use tax for sales delivered into the state. The seller shall remain eligible for participation in the Simplified Use Tax Remittance Program unless the seller establishes a presence through a physical business address for the purpose of making instate retail sales within the State of Alabama or becomes otherwise required to collect and remit sales or use tax pursuant to Section 40-23-190 through an affiliate making retail sales at a physical business address in Alabama.

(3) LOCALITY. A county, municipality, or other local governmental taxing authority which levies a local sales and/or use tax.

(4) SELLER. An individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or other legal entity.

(4) (5) SIMPLIFIED SELLERS USE TAX. The eight percent tax to be collected, reported, and remitted by eligible sellers who are participating in the program pursuant to requirements and procedures established pursuant to this part.

(5) (6) SIMPLIFIED USE TAX REMITTANCE PROGRAM or PROGRAM. The program established in this part to provide a mechanism for eligible sellers to collect, report, and remit the simplified sellers use tax established pursuant to this part.

(6) (7) STATE. The State of Alabama."

Section 2

The Simplified Sellers Use Tax Remittance Program may not be used to report sales tax obligations subject to the sales tax imposed by Chapter 23 of Title 40 or any local law or municipal ordinance or any county ordinance enacted pursuant to Section 40-12-4 imposing a sales tax for those sales of tangible personal property which are sold or removed from or at a retail location in this state or delivered at a retail location in this state.

Section 3

(a) For the purpose of this section, the following terms shall have the respective meanings ascribed to them: (1) DEPARTMENT. The Alabama Department of Revenue. (2) MARKETPLACE FACILITATOR. A person that contracts with sellers to facilitate for a consideration, regardless of whether deducted as fees from the transaction, the sale of the seller’s products through a physical or electronic marketplace operated by a person, and engages: a. Either directly or indirectly, through one or more affiliated persons in any of the following: 1. Transmitting or otherwise communicating the offer or acceptance between the purchaser and seller; 2. Owning or operating the infrastructure, electronic or physical, or technology that brings purchasers and sellers together; 3. Providing a virtual currency that purchasers are allowed or required to use to purchase products from the seller; or 4. Software development or research and development activities related to any of the activities described in paragraph b, if such activities are directly related to a physical or electronic marketplace operated by a person or an affiliated person, and b. In any of the following activities with respect to the seller’s products: 1. Payment processing services; 2. Fulfillment or storage services; 3. Listing products for sale; 4. Setting prices; 5. Branding sales as those of the marketplace facilitator; 6. Order taking; 7. Advertising or promotion; or 8. Providing customer service or accepting or assisting with returns or exchanges. (3) MARKETPLACE SELLER. A seller that does not have a retail location in the state and is not otherwise required to collect and remit sales or use tax. (4) PERSON. As defined in Section 40-23-1(a)(1). (5) PURCHASER. A person who purchases or contracts to purchase tangible personal property as defined in Section 40-12-220. (6) RETAIL SALE. As defined in Section 40-23-1, other than sales of motor vehicles as defined in Section 40-12-240. (7) SELLER. An individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or other legal entity. (8) STATE. The State of Alabama. (b) A marketplace facilitator may petition the department for approval to collect and remit simplified sellers use tax as levied by Section 40-23-193, on retail sales delivered to a location in this state that are made through the marketplace facilitator’s marketplace by or on behalf of a marketplace seller. Such petition may be made by the marketplace facilitator regardless of whether the marketplace facilitator has a retail location in this state. Taxes imposed by Chapter 23 of Title 40, or any local law or municipal ordinance, or any county ordinance enacted pursuant to Section 40-12-4 imposing a sales tax, may not be collected or remitted pursuant to this section for those sales of tangible personal property which are sold or removed from or at a retail location in this state or delivered at a retail location in this state. (c) Once approved by the department to collect and remit simplified sellers use tax under this section, a marketplace facilitator shall collect and remit the tax in accordance with the provisions of this section and Section 40-23-193 on all retail sales delivered to a location in this state made by or on behalf of all marketplace sellers for at least twelve months thereafter, other than those sales on which state or local sales taxes are due as described in subsection (b). (d) Marketplace facilitators that collect simplified sellers use tax under this section shall report and remit the tax in accordance with the provisions of Section 40-23-193 and shall maintain records of all sales delivered to a location in Alabama, including copies of invoices showing the purchaser, address, purchase amount, and simplified sellers use tax collected. Such records shall be made available for review and inspection upon request by the department. (e) Marketplace facilitators that properly collect and then remit to the department in a timely manner simplified sellers use tax on sales in accordance with the provisions of this section by or on behalf of marketplace sellers shall be eligible for the discount provided under Section 40-23-194. (f) The collection and remittance of simplified sellers use tax under this section relieves the marketplace facilitator, the marketplace seller, and the purchaser from any additional state or local sales and use taxes on the transactions for which simplified sellers use tax was collected and remitted. (g) Marketplace facilitators that collect simplified sellers use tax under this section shall not be subject to audit or review by any Alabama locality for simplified sellers use tax. (h) Marketplace facilitators participating in the simplified sellers use tax program shall be granted the amnesty protections otherwise provided for eligible sellers under Section 40-23-199. (i) Marketplace sellers for whom marketplace facilitators collect and remit simplified sellers use tax in accordance with the provisions of this section on all sales made by or on behalf of the marketplace seller and delivered into Alabama shall be granted the continued participation and amnesty protections provided for eligible sellers under Sections 40-23-198 and 40-23-199. (j) The marketplace facilitator shall provide the purchaser with a statement or invoice showing that the simplified sellers use tax was collected and is to be remitted on the purchaser’s behalf. The statement shall be in a manner prescribed by the department. (k) No class action may be brought against a marketplace facilitator in any court of this state on behalf of customers arising from or in any way related to an overpayment of simplified sellers use tax collected on sales facilitated by the marketplace facilitator, regardless of whether that claim is characterized as a tax refund claim. (l) The department may disclose the name of marketplace facilitators who are participating in the Simplified Sellers Use Tax program, the effective date the marketplace facilitator began participating in the program and, if applicable, the date the marketplace facilitator ceased to participate in the program. (m) The disposition of simplified sellers use tax remitted by marketplace facilitators shall be made in accordance with Sections 40-23-197 and 40-23-197.1. (n) Any taxpayer who remits simplified sellers use tax pursuant to this section shall be entitled to refunds or credits to the same extent and in the same manner provided for in Section 40-23-196 for taxes collected and remitted through the Simplified Sellers Use Tax Remittance Program. (o) Marketplace facilitators that collect and remit simplified sellers use tax on sales made by or on behalf of marketplace sellers shall be subject to the penalty provisions and procedures of Section 40-2A-11. (p) The department may adopt, promulgate, and enforce reasonable rules and regulations for the administration and enforcement of this section.”

Section 4

This act shall become effective immediately following its passage and approval by the Governor, or upon its otherwise becoming law.