Alabama

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The Alabama Supreme Court ruled that all software, including custom software, is tangible personal property subject to Alabama sales tax. The taxpayer filed refund claims for sales tax paid on computer software and accompanying equipment, claiming that an Alabama Department of Revenue regulation exempted these purchases from the sales tax as “custom software programming.” The…

In interpreting an ambiguous statute allowing for a tax credit against the state’s financial institution excise tax (FIET), the Alabama Court of Appeals held in favor of the Department of Revenue’s interpretation. Alabama imposes a 6½% FIET on the net income of certain financial institutions. After deducting administrative charges payable to the Department, the Department…

Reversing a judgment of the circuit court, the Alabama Court of Civil Appeals held that sales of prepaid authorization numbers that allow purchasers to access wireless services on cellular telephones are subject to the state’s sales tax. The court reasoned that during the 2008 through 2011 tax years at issue, the relevant sales tax statute…

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…

By Chelsea Marmor and Charlie Kearns

The Alabama Tax Tribunal (Tribunal) affirmed the Alabama Department of Revenue’s (DOR) assessment that denied Credit Suisse Boston USA Inc.’s (Credit Suisse) deduction for interest expense paid to a related member. Credit Suisse argued that the interest expense payments were exempt from Alabama’s addback requirement because the expense to…

By Nicole Boutros and Eric Coffill

The Alabama Tax Tribunal held that a taxpayer banking corporation properly deducted dividends received from an affiliated real estate investment trust (REIT) for financial institution excise tax purposes because the REIT qualified as a “corporation.” The Tribunal rejected the Department of Revenue’s assertion that the REIT was not a…

By Hanish Patel and Eric Coffill

The Alabama Tax Tribunal held that a taxpayer was entitled to a refund of sales taxes paid on purchases of software that was modified for its exclusive use because it constituted nontaxable custom software. Relying on its regulation, the Alabama Department of Revenue (DOR) denied the refund, stating the…

By Zack Atkins and Eric Coffill

The Alabama Tax Tribunal concluded that an out-of-state retailer was required to collect and remit use tax on the sales of books and educational materials to in-state teachers and students, and that neither the Due Process Clause nor the Commerce Clause impeded the Alabama Department of Revenue’s authority to…

By Chris Mehrmann and Scott Wright

The Alabama Tax Tribunal invalidated a regulation requiring a direct pay permit holder, Tyson Chicken, Inc. (Tyson), to purchase all items tax-free, finding that the regulation was both unreasonable and unduly burdensome. Although Tyson purchased most items tax-free using its direct pay permit, Tyson employees used corporate credit or…

By Stephanie Do and Carley Roberts

The U.S. Court of Appeals for the Eleventh Circuit affirmed dismissal of a taxpayer’s complaint, arising from the Alabama Department of Revenue’s assessment and collection of state income tax, for lack of subject matter jurisdiction under the Tax Injunction Act (TIA). The court held that the TIA prohibited…