Changes and Challenges
Affecting Individual
Taxes
Curtis E. Stewart
Deputy Commissioner
Alabama Department of Revenue
Discussion Points


ADOR Operations: Serving the Citizens of Alabama

Duties/Responsibilities

Organizational Structure

Gross Collections
ADOR Taxes and You: Current Topics Affecting Alabama Taxpayers

Individual Income Tax

Sales and Use Taxes

Property Tax
ADOR Operations
Serving the Citizens of Alabama
ADOR Mission Statement
 The
Alabama Department of Revenue
will effectively and efficiently
administer the revenue laws in an
equitable, courteous, and professional
manner to fund governmental services
for the citizens of Alabama.
Duties and Responsibilities - Generally

To inspect and examine any books, documents, records, or papers
kept by any person, firm, corporation, trustee, or receiver

To make all assessments of taxes or penalties which it is authorized to
enforce or collect and report the same to the Attorney General

To cause the deposition of witnesses residing within or without the
state to be taken upon such notice to the interested party

To issue executions and writs of garnishment

To investigate the tax system of other states; to thoroughly inform
itself upon the subject of taxation of the progress made in other
states

To consult and confer with the Governor upon the subject of taxation
and the administration of laws
ADOR Organizational Structure

Commissioner – Governor Appointed

Assistant Commissioner – highest state merited position

Deputy Commissioner – appointed positions within ADOR employees

Secretary – Tax Policy and Research Director currently fills this role

Legal Counsel – 16, commissioned as Assistant Attorneys General

Taxpayer Advocate – assists taxpayers with tax issues

12 Operating Divisions

9 Taxpayer Service Centers

1150 employees
Taxpayer Service Centers

Auburn/Opelika
Lee Murphy

Dothan
Danny Hansen

Gadsden
Lisa McKnight

Huntsville
Russell Jones

Jefferson/Shelby County
Ann Carlton

Mobile
Emanuel Roberts

Montgomery
Bill Hall

Shoals
Mark Peterson

Tuscaloosa
Jerry Bobo
ADOR is responsible for more than 50
different taxes but only a few comprise the
bulk of our collections. (Amts. In Millions)

Ind. and Corp. Income Taxes
$4,489

Sales & Use Taxes
$2,601

Utility Taxes
$ 645

Motor Fuels Taxes
$ 533

Property Taxes (state portion)
$ 389

Tobacco Taxes
$ 181

Business Privilege Taxes
$ 142
ADOR collects all but two major revenue
streams for the State of Alabama.
(Amts. In Millions)

Insurance Premiums Tax

Liquor

Beer
57

Wine
12

Total
$316
145
Alcoholic Beverages
$215
Gross Collections

4%
For fiscal year ending
2015, ADOR reported
total revenue collections
of $9,778,544,515.59.
1%
Income
8%
Sales &
Use
Business
Property
48%

For the fiscal year ending
2016, total collections
were $9,897,310,625.21,
an increase of
$118,766,109.62 or 1.2%.
39%
Other
Taxes
Annual Gross Collections
While none of
these yearly
increases are
large, we are
proud to say
that for each
year, over the
past five years,
we have grown
total
collections
from the prior
year anywhere
from two to
five percent.
10,000,000,000.00
9,800,000,000.00
9,600,000,000.00
9,400,000,000.00
9,200,000,000.00
9,000,000,000.00
8,800,000,000.00
8,600,000,000.00
8,400,000,000.00
2012
2013
2014
2015
2016
ADOR Taxes and You
Current Topics Affecting Alabama Taxpayers
Individual and Corporate Tax Division

The Individual and Corporate Tax Division is responsible for the
administration of the income tax, excise tax and business
privilege taxes for businesses and individuals.

They also are responsible for the Individual Electronic Filing
program, PC Online Filing program and Corporate Electronic
Filing program.

The following sections are a part of the Individual & Corporate
Tax Division: Individual Income Tax, Corporate Income Tax,
Business Privilege Tax, Financial Institution Excise Tax,
Partnerships, Estate and Fiduciary Tax and Withholding Tax.
Individual and Corporate Income Taxes


Identity Theft

Mandate and Duty to Protect Sensitive Information

My Alabama Taxes Accessibility

2-Factor Authentication to Log In
Electronic Filing

Over 90% Paperless Filings

Non-Traceable Origins

No-Cost to Submit Refund Returns

Profit Motive for Filing Companies
Individual and Corporate Income Taxes


Refund Fraud Complications & Tools

Excessive Refund Dollars Paid Out

Locked Account for Actual Taxpayer

File Early to Beat the Bad Guys

Voluntary Email Notice of Return Received

Voluntary Selfie Verification of Identity
Bogus Collections Calls

Non United States Origins

Threats of Arrest or Prosecution

Demands for Immediate Payments
Individual and Corporate Income Taxes


Individual Income Tax Enforcement

IRS Matching (Better & More Timely Data)

State Data Matching (Various Home Grown Data)

Treasury Offsets (Lowered Threshold / Other Taxes??)

State Refund Offsets for Other Debts
Planning Opportunities

Cash or Deferred Agreement (CODA)

State Itemized Deductions vs. Federal Standard Deductions
Sales and Use Tax Division

The Sales and Use Tax Division is responsible for
administering, collecting and enforcing the following
taxes and fees: Sales, Use, Lodgings, Rental, Contractors’
Gross Receipts, Cellular Telecommunications, Dry Cleaning
Environmental Response Trust Fund, Hydro-electric
Kilowatt Hour, Nursing Facility, Pharmaceutical Providers’,
Pre-paid Wireless 9-1-1 Service Charge, Utility Gross
Receipts, Utility Service Use, and Utility License (2.2%)

They also collect 222 Local Sales, Use, Rental and
Lodgings taxes for 200 locations.
Sales & Use Tax

Sales Tax Versus Use Tax

Sales Tax – In-state purchases

Use Tax – Out of State purchases brought into state

More Remote Transactions versus Less In-person Transactions

Physical Presence Sales Tax Test (Quill Case)

Streamlined Sales and Use Tax Agreement (SSUT)

Digital Equivalent Transactions
Sales & Use Tax

Required Use Tax Reporting on Individual Income Tax Return
 Difficulties

with Compliance
Remote SSUT Features

Voluntary

No Exemptions

Flat 8% tax rate

75% Distributions to General Fund

Purchasers May Apply for Refund of Excess Rate Charged
Sales & Use Tax

Non-SSUT Enforcement
 Requirements
 New

for 4% reporting
Egg Case
Changes to Local Nexus Rule
Property Tax Division

The Property Tax Division sets the standards and procedures for
equalization of property values in the counties, and ensures property
is taxed uniformly throughout the state.

Their purpose is to supervise and control the valuation, equalization,
assessment of property, and collection of all ad valorem taxes.

The Property Tax Division also advises and assists county elected
officials and their personnel, county commissioners, members of the
boards of equalization, and other officials charged with mapping and
appraisal duties, relating to laws, regulations, standards, and
procedures governing property tax administration.
OPPAL – Optional Personal Property Assessment Link
Act 2014-415 (HB 108); effective October 1, 2016
Optional Non-Itemized Short Form for Filing Business Personal
Property Tax Return

Provides for an optional non-itemized short form for certain taxpayers
to file their taxable personal property each year; requires the creation
of a state portal that taxpayers may use to electronically file their
Business Personal Property Return with any county in the state

Short form allows taxpayers who own taxable tangible personal
property that has a total acquisition cost of less than $10,000 to
file the short form in place of filing an itemized listing of their
assets

Provides provisions for the audit of any short form account and
penalties for falsely filing the short form when it is determined
that the assets actually had a total acquisition cost greater than
$10,000
Property Tax Issues


Duplicate Homestead Exemptions

Beach or Vacation Property

Inherited Property
Classification of Business Property as Personal Property


Vacation Rental Property
Delinquent Properties in State Inventory

Web Site Look-Up

Redemption Rights of Original Owners
President-Elect Proposed National Plans


Middle Class Tax Relief and Simplification Act

Middle class family with 2 children, 35% tax cut

Current number of brackets reduced from 7 to 3

Business rate lowered from 35 to 15 percent
American Energy & Infrastructure Act

Leverage public-private partnerships and private
investments through tax incentives
President-Elect Proposed National Plans


School Choice and Education Opportunity Act

Redirects education dollars to give parents choice of school

Ends common core

Expands vocational/technical education
Affordable Childcare and Eldercare Act

Allows deduction of childcare/elder care from taxes

Creates tax-free Dependent Care Savings Accounts
President-Elect Proposed National Plans

Repeal and Replace Obamacare Act

Fully repeals and replaces with Health Savings Accounts

Ability to purchase health insurance across state lines

States manage Medicaid funds
Summary

Reach out to ADOR as a tax resource

Take steps to protect your identity

Remit your consumers use tax

Use OPPAL to file business personal property tax returns
Resources/Contact Us

Administration Address: 50 North Ripley Street, Montgomery AL 36104

Website: www.revenue.alabama.gov

Taxpayer Service Centers: http://revenue.alabama.gov/about-service-centers.cfm

Commissioner’s Office: 334-242-1175
Questions