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Alabama residents will pay tax on Amazon sales beginning November 1, 2016.

Amazon will collect Alabama use tax beginning November 1, 2016.

Last year, Alabama created new requirements for out-of-state sellers making significant sales to Alabama residents. Before they took effect on January 1, 2016, Governor Robert Bentley dared Amazon and other remote sellers to sue the state, saying Alabama was prepared to argue its case before the United States Supreme Court. California-based Newegg Inc. is now “challenging the authority of the state of Alabama to require out-of-state retailers to collect and remit sales tax on purchases made by Alabama retailers.” Amazon, however, never rose to the bait.

Instead, Amazon is going to comply with Alabama’s Simplified Seller Use Tax Remittance Act, which enables “eligible sellers to … collect, report and remit a flat eight percent (8%) sellers use tax on all sales made into Alabama” (rather than varying rates due to local taxes). Approximately 50 online retailers already participate in the program, and together they have remitted almost $3 million in sales tax revenue to the state (wsfa.com). Amazon, which is currently “posting record gains quarter upon quarter” will be among the largest.

Amazon’s contribution to Alabama’s general fund will be welcome. However, as Alabama Commissioner of Revenue Julie Magee says, “It is not going to solve the state’s financial issues…. Our general fund needs $85 million right now.” To help make ends meet, Governor Bentley has proposed a lottery.

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