NFIB, the nation’s leading small business advocacy organization, today announced its support for Senate Bill 221, legislation that would stop Alabama from applying sales and use tax to credit card transaction fees, also known as “swipe fees.”

Swipe fees are fees charged by credit card company for processing payments. The fees are usually 2% to 3% of the sale and are charged to the businesses.

“Right now, Alabama taxes a small business based on its total sales, even though part of that money goes directly to the credit card company as swipe fees,” NFIB State Director Rosemary Elebash said.

“That means the business is being taxed on money it never actually receives,” Elebash said. “Our members don’t think that’s fair, and they’re asking their legislators to stop it by passing SB 221.”

Under the bill, the amount of any credit card transaction fee would be excluded from the amount used to calculate sales and use tax when a purchase is made by credit card. “In other words, sales tax would be based on the price of the goods or services, not the credit card fee,” Elebash said.

“SB 221 is about fairness and ensuring that sales tax is calculated on what the customer buys, not on the swipe fee added during checkout,” she said.