By Mike Le and Tim Gustafson 

On December 8, 2017, the Alabama Supreme Court issued an order without opinion in Thomas v. Elbow River Marketing Ltd. Partnership, affirming a lower court’s decision that a Canada-based seller of hydrocarbon products did not engage in or carry on a business in the City of Birmingham and thus was not subject to the city’s business license tax. The taxpayer had no physical operations, place of business, employees, agents or representatives in the city. Further, the taxpayer did not solicit sales or otherwise conduct sales or advertising activities in the city. Its only contact with the city consisted of sales of hydrocarbon products to two Alabama-based customers. The products were delivered into the city by third-party rail or trucking carriers, and the taxpayer retained title to some of the products while in the possession of the carriers. The lower court concluded, and the Alabama Supreme Court agreed, that under Alabama law, a product seller cannot be subjected to the city’s business license tax if it does nothing more than deliver its goods into the city by common carrier. Thomas v. Elbow River Marketing Ltd. Partnership, No. 1160678 (Ala. Dec. 8, 2017).