DOTHAN-RSN
A multi-million-dollar legal dispute is unfolding in Alabama over how revenue from online sales taxes is divided between cities and counties.
At the center of the conflict is the Simplified Seller’s Use Tax (SSUT), an 8% tax applied to online purchases. Under the current state formula, that tax revenue is split between cities and counties — but several city leaders argue the distribution is unfair and no longer reflects modern shopping habits.
Dothan Mayor Mark Saliba says cities are losing out.
“That’s the money that we really have to have,” Saliba said.
Under traditional in-store sales, cities like Dothan receive a 4% local sales tax when purchases are made within city limits. However, for online purchases under the SSUT, cities receive only 2%, with the remaining portion going to counties.
Saliba says the difference has a real impact on city services.
“It’s hurting people who are in our school systems. They’re losing out on revenue. It’s hurting the cities,” Saliba said. “We’re living differently. We’re shopping differently. Everybody buys things online, and that’s not going to change.”
The dispute has escalated into a legal battle, with cities and counties taking opposing sides over how the tax should be divided moving forward. Saliba believes the issue could be resolved without prolonged litigation if compromise is reached.
“If you know me, I’m always looking for that middle ground and that compromise and collaborating with anybody,” Saliba said. “And so I am open to continue to do that.”
Despite that openness, Saliba maintains that Dothan is not receiving what he considers its fair share of online sales tax revenue — money the city depends on to continue operations and services.
The State of Alabama has asked the court to dismiss the lawsuit. A ruling on the case is expected in January.
