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On September 30, 2015 the U.S. House of Representative passed H.R. 719, which includes a provision that would extend the Internet Tax Freedom Act (ITFA) through December 11, 2015. The ITFA was scheduled to expire on October 1, 2015. The bill will now go to President Obama for signature.


To see our previous news item on the ITFA, visit Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


To see an update on this news item, visit Internet Tax Freedom Act Extended Through October 1, 2016,


(H.R. 719)


Alabama has enacted legislation directing the state’s Department of Revenue to implement a tax amnesty program effective for at least two months in 2016 and taking place before August 31, 2016. The amnesty program will apply to all taxes administered by the department, except for motor fuel taxes and certain penalties. Taxes due prior to January 1, 2015 or taxes for taxable periods that began before January 1, 2015 are eligible for the program. 50% of interest and all penalties on the applicable tax will be waived under the program. A look-back period of three tax years will apply. If a taxpayer has collected any tax without remitting it, the look-back period includes all periods back to the point of collection. Participating taxpayers must agree that the right to protest or initiate an administrative or judicial proceeding is barred.(Act 2015-555 (S.B. 20c), Laws 2015, effective September 21, 2015)


UPDATE: Alabama has announced the dates of its 2016 tax amnesty program. The program will run from June 30, 2016 through August 30, 2016.


On June 15, 2015, Representative Jason Chaffetz (R-UT) introduced the Remote Transactions Parity Act (RTPA) of 2015 in the U.S. House of Representatives. The bill – similar to the Marketplace Fairness Act (MFA) of 2015 – pertains to sales and use taxcollection obligations for remote sellers, but the RTPA contains some differences and several additional provisions. Unlike the MFA’s $1 million small seller exception, the RTPA’s small seller exception is as follows: first year: $10 million; second year: $5 million; third year: $1 million. The exception goes away in the fourth year. Furthermore, under the RTPA sellers utilizing an electronic marketplace are not considered small sellers and are not entitled to the exception, no matter the year. Under the RTPA, sellers would not be audited by states where they don’t have a physical presence. There would be a three year statute of limitations for assessments on remote sellers. The bill would enable remote sellers to refund over-collected tax to customers. The RTPA also specifies that a state would not be authorized to impose a sales and use tax collection requirement on remote sellers until it has certified multiple software providers that are certified in all states seeking to impose authorization requirements. The RTPA would also allow customers to pursue refunds of over-collected tax from remote sellers. However, RTPA does not preempt states from imposing sales and use taxes on remote sellers that do not have physical presence under this definition. It merely authorizes states to impose sales and use tax on remote sellers without a physical presence. Under the RTPA, if a seller has nexus under existing law, including Quill v. North Dakota, then the state may still impose a sales and use tax collection requirement.  The bill is assigned to the Judiciary Committee just like the MFA.  On July 1, 2015 it was referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law. (H.R. 2775, the Remote Transactions Parity Act of 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.


Alabama has adopted a new sales and use tax rule on sales of prepaid wireless service, effective March 27, 2015. The new rule provides that sales of prepaid wireless services constitute the sale of tangible personal property subject to sales or use tax. The rule also provides that sales of prepaid telephone calling cards and prepaid authorization numbers constitute sales of tangible personal property subject to sales or use tax. For transactions that occurred prior to July 1, 2014 for which the consumer did not receive from the retailer either an authorization number or a physical card, the Department of Revenue or local tax officials cannot seek payment for sales tax not collectednor can the taxpayer or the entity remitting sales tax seek a refund of such tax paid. (Rule 810-6-5-.36.01, Alabama Department of Revenue, effective March 27, 2015)


The U.S. Supreme Court has found that motor carriers and water carriers are an appropriate comparison class in a rail carrier’s claim that Alabama’s asymmetrical sales tax treatment is discriminatory in violation of the Railroad Revitalization and Regulation Reform Act of 1976 (the 4-R Act). The 4-R Act prohibits a state from imposing a “tax that discriminates against a rail carrier” that is subject to the provisions of the Act. In Alabama, diesel fuel purchased by motor carriers and water carriers is exempt from tax, but diesel fuel purchased by rail carriers is subject to sales tax. The U.S. Supreme Court held that Alabama’s sales tax on diesel fuel purchased by rail carriers is discriminatory against rail carriers only if the state can’t justify the differences in tax treatment between the similarly situated taxpayers. The case was remanded to the Eleventh Circuit, and the U.S. Supreme Court directed it to consider Alabama’s justifications for the different tax treatment of rail, motor and water carriers. Previously, Alabama argued that sales and use tax exemptions can’t discriminate within the meaning of the 4-R Act, but the U.S. Supreme Court rejected this position. To see our previous news item on this decision, see U.S. Supreme Court Holds That 4-R Act Challenges Can be Based on Exemptions. The Court also held that other aspects of a state’s tax scheme may be considered when examining tax discrimination claims. The Court remanded the case to the Eleventh Circuit to consider whether the excise tax on diesel fuel for motor carriers is equivalent to the sales tax on diesel fuel for rail carriers. The Court also remanded the case for consideration of the different treatment for water carriers.(Alabama Department of Revenue v. CSX Transportation, Inc., U.S. Supreme Court, Dkt. 13-553, March 4, 2015)



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