First holiday season Alabama fully collects online sales tax

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HUNTSVILLE, Ala. - This is the first holiday shopping season where Alabama can fully collect sales tax online, a benefit to the state. Trying to collect online sales tax in Alabama was a decades-long problem, but this year the Alabama Retail Association's Melissa Warnke says those online purchases will be a huge benefit.

"There is now a judicial precedent that says that the state does have the ability to ask those out of town businesses that don't have any physical presence in Alabama to collect and remit sales tax," she explained.

As of October 1, the state has been collecting those online sales tax. Retailers say this will level the playing field for tax collection.

Before the supreme court ruling, the state was collecting online sales tax through a voluntary system.

"They did that because they were able to lock in at an eight percent rate," Warnke said.

According to the Alabama Retail Association, the state has collected $79 million in online sales tax since January.

"It's 79 million that we wouldn't have gotten otherwise for the things that go to the cities and counties, for infrastructure, and all kinds of things that our tax dollars are supporting," Warke added.

The retail association said physical shops are excited because a sales tax won’t stop someone from going to their store. Since the tax went into effect, Alabama received over $3 million more in October 2018 than in October of 2017.

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