Bentley: Closing tax loophole would raise funds

Published 4:29 pm Wednesday, March 30, 2011

The state Department of Revenue has proposed a new rule that Gov. Robert Bentley said would close a tax loophole and raise $30 million for the state’s education budget.

The Department of Revenue has submitted for publication a proposed rule known as the Gross Income Tax Regulation, which will address a loophole in the current tax law that allows multi-state businesses to avoid paying taxes on income earned in Alabama.

The Department of Revenue expects that this administrative change will generate approximately $30 million for the 2012 Education Trust Fund budget, and approximately $17 million per year thereafter, Bentley said.

“This is an issue of tax fairness,” Bentley said. “The loophole that we are closing is only available to certain types of multi-state companies, and these companies ought to pay their fair share of taxes just like everyone else in Alabama. The revenues generated by closing these loopholes will allow the Legislature to increase funds to local school systems to help replace some of the lost federal stimulus dollars.”

Public notice of the proposed changes is being published this week.  A public comment period will run through May 6. The Alabama Revenue Department will hold a public Rule-Making Hearing on Thursday, May 5,  to consider comments and suggestions to the proposed regulation.