Tuscaloosa Sues Alabama Revenue Commissioner Over Sales Tax Lawsuit.

The City of Tuscaloosa and Tuscaloosa City Schools have filed a lawsuit against the Alabama Department of Revenue Commissioner over the Simplified Sellers Use Tax Program (SSUT). The program allows companies with a physical presence in Alabama to participate and avoid collecting traditional state or local sales taxes, resulting in revenue generated in the community being sent elsewhere. The lawsuit aims to protect local revenue and safeguard schools, first responders, and small businesses that rely on local dollars staying in the community.

TUSCALOOSA, Ala. — The City of Tuscaloosa and Tuscaloosa City Schools have filed a lawsuit against Vernon Barnett, the Commissioner of the Alabama Department of Revenue, challenging the legality of the state's Simplified Sellers Use Tax (SSUT) program. The lawsuit, filed on August 12, 2025, in the Circuit Court of Montgomery County, argues that the program unlawfully allows companies with a physical presence in Alabama to participate, diverting local tax revenue away from the community.

The SSUT program was initially designed as a voluntary tax system for entities without a physical presence in Alabama. However, the plaintiffs contend that the program has not been updated following the 2018 Supreme Court ruling in South Dakota v. Wayfair, Inc., which allows states to tax remote sellers with a "substantial nexus" in the state. The lawsuit claims this oversight has resulted in millions of internet-based transactions evading traditional state and local taxes.

"The Simplified Sellers Use Tax takes revenue generated in our community and sends it elsewhere," said Tuscaloosa Mayor Walt Maddox. "For nearly a decade, we have proposed legislative changes and attempted to work with the Alabama Department of Revenue to make regulatory updates to fix SSUT. Despite our repeated efforts, our concerns remain unaddressed, leaving us no choice but to take legal action."

The complaint outlines three main counts against the Commissioner: the SSUT program's "participant's choice" provision violates the Alabama Constitution, the unlawful qualification of national retailers as "eligible sellers," and the improper classification of entities like DoorDash and UberEats as "marketplace facilitators."

Mayor Maddox emphasized the lawsuit's importance, stating, "This lawsuit is necessary to protect the revenue Tuscaloosa has earned and to safeguard our schools, first responders, and small businesses that rely on local dollars staying in the community where they were generated."

The plaintiffs seek a court order to declare the SSUT program's provisions unconstitutional and to require all eligible sellers with a substantial nexus to collect conventional state and local sales taxes. They also request the disqualification of ineligible participants from the program.

[1] https://abc3340.com/news/local/tuscaloosa-sues-alabama-revenue-commissioner-over-tax-program-simplified-sellers-use-tax-ssut-program-mayor-walt-maddox-august-2025-tuscaloosa-city-schools