SB496 By Senator Orr RFD Finance and Taxation General Fund Rd 1 21-MAY-15

SYNOPSIS: This bill would amend Sections 40-23-85 and 40-23-174, Code of Alabama 1975 to provide further for the distribution of use tax funds.

A BILL TO BE ENTITLED AN ACT

To provide for legislative findings; and to amend Sections 40-23-85 and 40-23-174, Code of Alabama 1975 to provide further for the distribution of use tax funds.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. The Legislature of the State of Alabama hereby finds the following:

(a) the State General Fund has an immediate projected deficit for fiscal year 2016 in excess of $250 million;

(b) the Legislative Fiscal Office has estimated a projected balance in the Education Trust Fund Budget Stabilization Fund at the end of fiscal year 2016 in excess of $350 million;

(c) currently, (1) the Education Trust Fund receives 75% and the State General Fund receives 25% of the state use tax and (2) the State General Fund receives 75% and the Education Trust Fund receives 25% of the state remote use tax;

(d) the United States Congress is closer to resolving issues concerning the ability of states to tax remote use sales; and

(e) redistributing the state use tax and the state remote use tax equally among the Education Trust Fund and State General Fund will help resolve the State General Fund's immediate crisis and will allow the Education Trust Fund to receive a greater benefit from the remote use tax upon federal action.Section 2. Sections 40-23-85 and 40-23-174, Code of Alabama 1975, are amended to read as follows:

§40-23-85.

All taxes, fees, interest or penalties imposed and all amounts of tax herein required to be paid to the state under this article must be paid to the Department of Revenue at Montgomery, Alabama, with remittance payable to the Treasurer of Alabama. Such amount of money as shall be appropriated for each fiscal year by the Legislature to the Department of Revenue with which to pay the salaries, the cost of operation and the management of the said department shall be deducted, as a first charge thereon, from the taxes collected under and pursuant to Section 40-23-61; provided, that the expenditure of said sum so appropriated shall be budgeted and allotted pursuant to Article 4 of Chapter 4 of Title 41, and limited to the amount appropriated to defray the expenses of operating said department for each fiscal year. After the distributions provided herein and the distributions of use tax on automobiles to the General Fund as provided in Section 40-23-61(c), the balance of the tax collected under and pursuant to said Section 40-23-61 shall be distributed as follows: (1) remote use tax amounts, seventy-five percent (75%) fifty percent (50%) to the General Fund and twenty-five percent (25%) fifty percent (50%) to the Education Trust Fund, and (2) any remaining amounts, seventy-five percent (75%) fifty percent (50%) to the Education Trust Fund and twenty-five percent (25%) fifty percent (50%) to the General Fund. An amount sufficient to fund the Children's Health Insurance Program (CHIP) shall be distributed annually as a first charge against the amounts allocated to the General Fund under this section. It is the legislative intent that all amounts collected on transactions involving a seller located outside the State of Alabama when the property is shipped or transported from outside the state shall be considered use tax for the purpose of this distribution, regardless of whether the taxes may be considered sales taxes for other purposes.

§40-23-174.

(a) Should the enactment of a national agreement for the collection of sales and use taxes from remote sellers establish a single national tax rate on such remote sales or should the agreement provide for the State of Alabama to establish a single statewide rate on such remote sales, the proceeds shall be distributed as follows:

(1) One-half of such proceeds shall be distributed to the State of Alabama of which 75% 50% shall be deposited into the General Fund, and 25% 50% shall be deposited into the Education Trust Fund.

(2) One-quarter shall be distributed to the governing body of the municipality in which the delivery is made, if the delivery is made into a municipality.

(3) The remainder shall be distributed to the county governing body in the county in which the delivery is made.

(b) The tax proceeds distributed to a municipality or county shall be expended by the governing body of the municipality or county as required and provided by law for other sales and use tax proceeds levied and collected by the county or municipality including any bonded indebtedness."

Section 3. The provisions of this act are severable. If any part of this act is declared invalid or unconstitutional, that declaration shall not affect the part that remains.

Section 4. All laws or parts of laws which conflict with this act are repealed.

Section 5. This act shall become effective June 1, 2015, following its passage and approval by the Governor, or upon its otherwise becoming law.

Taxation

Sales and Use Tax

Motor Vehicles

Remote Sales

Code Amended