The City of Mountain Brook has joined the City of Tuscaloosa in a lawsuit challenging Alabama’s current method of distributing revenue from the state’s Simplified Sellers Use Tax (SSUT).
Tuscaloosa approved filing the lawsuit at its July 2 meeting, and the Mountain Brook City Council voted unanimously to join during its meeting on July 15.
The SSUT, created in 2015 and implemented following the U.S. Supreme Court’s Wayfair decision in 2018, is a flat 8% tax applied to online purchases delivered to addresses in the State of Alabama.
The tax was designed to simplify collections from online and out-of-state sellers lacking a physical presence in the state. According to Mayor Walt Maddox, the formula is costing Tuscaloosa as much as $12 million a year.
Under current law, 50% of SSUT revenue is allocated to the state’s General Fund and Education Trust Fund, while the remaining 50% is distributed to cities and counties based strictly on population — regardless of where the purchases originated.
City leaders argue that this formula shortchanges municipalities like Mountain Brook, where residents generate a high volume of online sales tax revenue.
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In a statement sent to Yellowhammer News, Mayor Stewart Welch said, “This is about fairness. Cities like Mountain Brook should receive a more equitable portion of the revenue generated by their own citizens.”
City Council President Virginia Smith echoed that view, saying, “We’ve watched this imbalance for years while continuing to invest in public safety, infrastructure, and quality of life. Joining this lawsuit is a necessary step to advocate for the fiscal future of our city and ensure our ability to serve the community well.”
Sherri Blevins is a staff writer for Yellowhammer News. You may contact her at sherri@yellowhammernews.com.
