Several bills this session have been developed in response to rule interpretations or actions taken by the Alabama Department of Revenue (DOR) that negatively impact the state’s business community. Here’s a look at three measures that would push back on the DOR and help Alabama small businesses.
HB 313: Severance Tax Bill
Without circulating new rules for review, the Alabama DOR expanded definitions used in calculating and collecting forest product severance and forest product manufacturing taxes, essentially allowing for “taxing the same tree twice.” House Bill 313 amends and simplifies the language in this rule to clarify legislative intent and ensure that the taxes are only paid once. HB 313 was passed by the Legislature earlier this month and, at this writing, is expected to be signed into law by Gov. Ivey.
SB 395: Lodging Tax Bill
The Alabama DOR has expanded their interpretation of when to apply the state’s lodging tax, including on rooms that are not being used for overnight accommodations. In response, several bills were introduced this session, including House Bill 392, Senate Bill 285, and Senate Bill 395. SB 395 would clarify state law by explicitly stating that the lodging tax is only to be assessed on rooms used for overnight guest lodging and not for the rental or use of wedding chapels, banquet halls, conference rooms, and so on.
The Alabama Tax Tribunal already struck down the DOR’s rule on this (810-6-5-.13) after a case was brought by Stone Bridge Farms when the business was charged the lodging tax on their wedding chapel and other banquet rooms, but DOR continues to collect the tax on non-overnight lodging rooms. If passed, SB 395 would prohibit the DOR from continuing to do so. The proposal is on the Senate Calendar at this writing.
HB 290: Commercial Photography Bill
In 2014, the Alabama DOR made a rule change that implemented a labor and services tax on commercial photography businesses. Since then, Omni Studio has challenged the DOR on the issue before the Alabama Tax Tribunal, Jefferson County Circuit Court, Alabama Court of Civil Appeals, and the Alabama Supreme Court. In all jurisdictions, Omni Studios prevailed.
Now, House Bill 290 would stop the DOR from continuing audits for the labor and services tax on commercial photography businesses. Many NFIB/AL members have been affected by this collection practice, and NFIB/AL submitted comments in opposition to the rule change in 2014. HB 290 has passed the House and is awaiting final passage in the Senate.