Construction of Taxing Statutes - Use Tax - Foreign Corporation - Presence of Agent In State

|

Alabama Dept. of Revenue v. Scholastic Book Clubs, Inc., [Ms. 2161077, Sept. 7, 2018] __ So. 3d __ (Ala. Civ. App. 2018). This unanimous decision by Judge Donaldson (Thomas, J., recuses) affirms the Montgomery Circuit Court’s judgment reversing a decision of the Alabama Tax Tribunal upholding a final assessment of use tax pursuant to § 40-23-60 against Scholastic Book Clubs, Inc. (“SBC”). Ms. *1-2.

The Department of Revenue contended SBC was subject to the use tax because it uses Alabama teachers to act as salespersons in conducting sales to students over its website. Ms. *20.

Applying settled law that a taxing statute must be strictly construed against the taxing power, the court held SBC was not subject to the tax because the teachers were not “employed or retained under contract as required by § 40-23-60(a)(b)(3) [Ala. Code 1975].” Ms. *21.

The court declined to reach the question of the permissible reach of Alabama’s taxing authority under the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., __ U.S. __, 138 S.Ct. 2080 (2018) “because the Department’s specific interpretation and application of the Alabama taxing statutes, in this case, did not impose an obligation to collect use tax on SBC based on its activities.” Ms. *27.

Related Documents

Categories: 
Share To: