Alabama Establishes Independent Tax Tribunal

Alabama has just recently established an independent tax tribunal effective October 1, 2014, replacing its Administrative Law Division which was tied to the Department of Revenue.  See 2014 Alabama House Bill No. 105.  This is significant, as Alabama has attempted to establish this tribunal multiple times in order to improve its tax administration and business climate.

What It Entails
The independent Alabama Tax Tribunal is an executive branch agency developed to hear tax matters as well as other matters administered by the Department of Revenue and certain participating self-administered counties and cities.  Its purpose is to resolve disputes between taxpayers and the above jurisdictions before requiring payment of the assessed amounts or the posting of a bond.  Taxpayers will first have full opportunity to attempt settlement with the Department of Revenue before appearing before the Tribunal.  Decisions rendered by the Alabama Tax Tribunal will have the same force and effect, and have the same appeal rights as a final decision of a state circuit court.

The Tribunal will include at least one full time judge appointed by the Governor to serve a six-year term, but as many as three appointed judges may serve at one time.  Hearings may be scheduled at the principal office in Montgomery, Alabama, or if the issue involves a certain jurisdiction, may be scheduled within that jurisdiction.

The Tribunal will hear questions of fact and law and questions involving the constitutionality of the application of statutes and regulations but will not have the power to declare a statute unconstitutional.  Hearings will be tried de novo and without a jury.

What This Means to Firms Taxable in Alabama
Independent Appeals Tribunals are the primary ingredient of a fair, efficient tax administration. Alabama had recently been ranked in the bottom four states in terms of state tax administration, with a D letter grade, by the Council on State Taxation (COST) in their December 2013 study.  This recent news will likely bring that score up to the A range, as Pennsylvania’s score did in 2013 for enacting similar legislation.
Without true independence in the appeals process, there is potential for error and bias in the determinations of a tax department.  Concerns about revenue collection, upholding departmental policies, or offending departmental decision makers are no longer valid once there is true independence.  In addition, the State’s granting of the ability to discuss and possibly settle disputes prior to reaching the Tribunal will help taxpayers avoid costly litigation.  The ability to avoid payment of the assessment until final decision by the Tribunal is also encouraging.

How Can We Help? 
Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of multi-state and local tax compliance and consulting for large US and global corporations.  We use that experience to your advantage.  Contact us and we can provide a customized cost-effective solution to meet your company’s needs.  For further information on Allyn Tax services, please contact: tax@allynintl.com.