Audit and Collection Bill signed into law

Date: May 17, 2016 Last Edit: May 18, 2016

Legislation would ease frustration for small business owners.

Audit and Collection Bill signed into law

After several rounds of negotiation, legislation
to change the law concerning auditing and collection firms passed at the end of
the 2016 Regular Legislative Session. SB 335 would update the Alabama
Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act to prevent
auditing and collection firms from mistreating businesses and to prevent
businesses from being overburdened by the auditing process.

Over the years, the issue of third-party
auditing and collection firms has been a major source of frustration for
Alabama business owners. NFIB/Alabama has received numerous complaints over
many years from members who are dealing with a third-party firm under contract
with a municipality or county for auditing and collecting tax receipts. Many
legislators have received complaints from constituents as well.

During a House State Government Committee public
hearing in late March, one business owner revealed that a third-party auditing
and collection firm had presented him with a tax bill for $95,000, but after
his attorney reviewed the audit findings, the tax bill was slashed to $135.80.
The business owner’s payment to his attorney, however, was $45,000.

 

As originally introduced, SB 335 would have
prohibited municipalities from entering into a contract with a private auditing
and collection firm. The sticking point—leading to an initial failure to pass
to the House State Government Committee—was that these private firms would
continue to audit, collect, and present final assessments on sales, use, and
lodging taxes, as well as be paid a contingency fee for the collection of business
and delivery licenses.

After the proposed compromise failed with a 7–6
vote, NFIB and other trade associations helped negotiate a compromise between
all parties, and a substitute bill was adopted by the House State Government
Committee and the Senate County and Municipal Government Committee unanimously.
Under the substitute bill, private auditing and collection firms would have to
meet specific requirements and make disclosures to the taxpayer when contracted
by a municipality or county, including confidentiality requirements, use of an
independent appeals officer, and signature approval on the final assessment
from a public official or employee of the local government.

NFIB/Alabama thanks Sen. Paul Sanford, Rep. Paul
Lee, and Rep. Mark Tuggle for taking on this battle on behalf of small
business!

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