Yesterday afternoon, the Alabama Department of Revenue (ADOR)
withdrew its controversial proposed digital tax regulation, Rule 810-6-5-09, likely in response to the
request of the Legislative Council's newly-appointed Chairman,
Senator Paul Sanford (R-Madison/Huntsville). In a letter sent to
the Commissioner of Revenue last week, Senator Sanford warned that
he would convene a meeting of the Council next Wednesday to
consider rejecting the regulation. Senator Sanford's letter was
consistent with the letter delivered to the Commissioner on the
date of the administrative hearing on the proposed regulation.
There were similar calls to withdraw the proposal by legislative
leaders, many in the business community, and some in the media,
largely based on the argument that the proposed regulation exceeded
the scope of the ADOR's rule-making authority and was instead
within the exclusive jurisdiction of the Legislature to
consider.
Despite this announcement by the ADOR, it is unknown whether the
ADOR will make any attempts in the future to tax these types of
digital services without legislative approval. It is uncertain
whether the Legislature will take up this issue in the likely
special session later this summer or perhaps will defer
consideration until the 2016 regular session (or later).
The authors served as local counsel to the Digital Goods and
Services Coalition, one of the many groups that opposed the
regulation.
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