Justia Tax Law Opinion Summaries

On January 21, 2014, House Bill 331 (H.B. 331) was introduced in the Alabama House of Representatives "to authorize the [Chilton] county commission to levy an additional one cent sales tax which shall be used exclusively for the construction, maintenance, and operation of a hospital in Chilton County; to provide for an expiration date for the tax; and to provide for a referendum and subsequent referendums." H.B. 331 was approved by both the Alabama House and Senate. The Governor signed the bill into law, designated as Act 2014-162. Notices had been placed in a county newspaper containing the full text of a second bill, introduced as Senate Bill 462 (S.B. 462), "to levy additional sales and use taxes to be used for the construction, maintenance, and operation of hospital facilities in Chilton County; to provide for certain matters relating to the administration, collection, and enforcement of such taxes; to provide for the effective date and termination of such taxes; to provide for an advisory referendum regarding the levy of the taxes; to provide that such taxes may not be abated pursuant to Chapter 9B, Title 40, Code of Alabama 1975, or otherwise; and to authorize the pledge of such taxes by Chilton County or a public corporation acting as its agent to secure indebtedness issued for the purposes for which the taxes are authorized." S.B. 462 was approved by both the House and Senate, and again forwarded to the Governor, who declined to sign it so that it be amended so that it repealed the earlier bill as a duplicative Act. The Legislature approved an amended version of S.B. 462, and the amended bill was signed into law as Act 2014-422. No notice of 2014-422 was ever published to Chilton County. An advisory referendum was held in Chilton County pursuant to Act No. 2014-422, and voters approved the tax. Roy Burnett filed a complaint on behalf of himself and others who paid the tax pursuant to 2014-422, arguing the act was unconstitutional because the bill was designed to raise revenue and did not originate in the House,and was not published after it was amended and signed into law. The Alabama Supreme Court determined 2014-422 was not unconstitutional because it was designed to "raise revenue" as that phrase was contemplated by section 70 of the Alabama Constitution. However, the Court found the Act violated section 107 of the Constitution because no published notice of the Act informed the people of Chilton County it was repealing Act 2014-162. Judgment was reversed that the matter remanded for further proceedings. View "Burnett v. Chilton County Health Care Authority and Chilton County" on Justia Law

Jefferson County and the Jefferson County Commission (collectively "the County parties") appealed a circuit court judgment denying a petition for validation of the warrants filed by the County parties, pursuant to section 6-6-750 et seq., Ala. Code 1975, and opposed by the taxpayers and citizens of Jefferson County. Andrew Bennett, Mary Moore, John Rogers, and William Muhammad cross-appealed the portion of the trial court's judgment declining to address alternative arguments they raised. In 2004 and 2005, Jefferson County issued warrants to raise funds to make certain grants to local boards of education to construct school buildings and to retire other debt. All the revenue from Jefferson County's existing 1% education sales and use taxes levied under section 40-12-4, Ala. Code 1975, was pledged and required to pay the debt service on the outstanding warrants and certain related costs. Jefferson County experienced severe financial difficulties in recent years that eventually resulted in the County's filing a petition in bankruptcy. In 2009, the Alabama Supreme Court held that Jefferson County's occupational tax, imposed since 1987, was unconstitutional. In 2015, Jefferson County and its legislative delegation proposed local legislation in an effort to bolster the County's finances without an occupational tax. Jefferson County proposed a new 1% sales tax and a 1% use tax to replace its existing 1% education sales and use taxes, the purpose of which was to fund new warrants at lower interest rate and a lower required debt service that would allow the County to retire its existing warrants. In 2015, Bennett, Moore, Rogers, and Muhammad ("the class plaintiffs") filed a class action against Jefferson County challenging the constitutionality of Act No. 2015-226 which enacted the new Jefferson County sales and use taxes. The circuit court declared Act 2015-226 unconstitutional, and the County parties appealed. Finding that the circuit court erred in finding the Act unconstitutional, and finding no merit in the alternative grounds on which the taxpayers argued the Act was unconstitutional, the Supreme Court reversed (Case No. 1150326) and dismissed (Case No. 1150327). View "Bennett v. Jefferson County" on Justia Law

Michael Howard appealed the grant of summary judgment entered against him in the action he commenced on behalf of himself and all other similarly situated taxpayers in Cullman County against Cullman County and its Revenue Commissioner Barry Willingham, in his official capacity. Howard sought a refund of property taxes he and other taxpayers paid in 2013. Howard sought a judgment declaring that, pursuant to former section 40-7-42, the Commission's levy of property taxes for October 1, 2012, through September 30, 2013, was invalid because it was done in May 2013 rather than at the Commission's first regular meeting in February 2013. He also sought the return of property taxes collected in 2013. The Supreme Court found that the trial court correctly concluded that the Commission's failure to follow the timing provision of former 40-7-42 did not invalidate its subsequent levy in 2013 of property taxes upon Howard and other property owners in Cullman County. Therefore, the Court affirmed summary judgment on all of Howard's claims in favor of Cullman County and the revenue commissioner. View "Howard v. Cullman County" on Justia Law