Municipalities ? Tax Liens ? Tax Certificates ? Shelby County
Pursuant to section 11-51-204 of the Code of Alabama, the City of Alabaster is authorized to pass an ordinance that is similar to or expressly adopts the provisions in either section 40-1-2(c) or 40-29-20 of the Code of Alabama, which would authorize the filing of a Certificate of Taxes Due to collect sales and use, but not business license, tax.
The city may not utilize section 40-1-7 of the Code of Alabama to hold an agent of a company personally liable for the taxes due by the company.
Dear Mr. Brumlow:
This opinion of the Attorney General is issued in response to your request on behalf of the City of Alabaster.
QUESTIONS
- May the City of Alabaster, as a self-administered taxing jurisdiction, file Certificates of Taxes Due pursuant to section 40-1-2(c) of the Code of Alabama?
- May the City of Alabaster hold the agents of companies personally liable for certain taxes due the city pursuant to section 40-1-7 of the Code of Alabama?
FACTS AND ANALYSIS
The City of Alabaster is a self-administering jurisdiction, which means the City administers its own sales and use taxes and possibly other municipal taxes authorized to be levied by general act of the legislature or by local act.? See, Ala. Code ??40-2A-3(21) (2005).? In your letter of request, you informed this Office that the City of Alabaster imposes business license tax pursuant to section 11-51-90 of the Code of Alabama, and that section 11-51-96 of the Code provides the City with the ability to place a lien on real and personal property for delinquent business license taxes.? Further, the City imposes sales and use taxes pursuant to section 11-51-200 et seq., of the Code of Alabama.
You reference two provisions in your request that are found in Title 40 of the Code of Alabama.? These provisions are sections 40-1-2(c), which provides a procedure for filing a certificate of taxes due in probate court in any county of the state, and section 40-1-7, which provides for the personal liability of the agent for any person, company or corporation.? You seek guidance regarding the City?s ability as a self-administering jurisdiction to use this authority and question whether any provision of law expressly grants or denies the City the ability to use these general state law remedies.
Title 40 of the Code, however, applies to the Department of Revenue while Title 11 applies to municipalities and counties. ?Title 40 remedies are not, by the plain language within the statute, available to municipalities, even if those municipalities act as self-administered taxing jurisdictions. ?Rather, the remedies for a municipality seeking to collect its taxes are typically limited to the provisions found within Title 11 of the Code of Alabama.
Nonetheless, your initial question references section 40-1-2(c) of the Code of Alabama, which provides, in pertinent part, as follows:
The Department of Revenue or other agency of the state or county with whom the assessment list, return or to whom the payment of the tax was due to have been made or paid may file in the office of the judge of probate of any county in this state a certificate which shall show the agency of the state filing the same, the amount and kind of the tax for which a lien is claimed, including any interest, penalty, additional amount, or addition to such tax, together with any costs that may have accrued in addition thereto, the names of all persons against whose property a lien for such tax is claimed and the date of the said notice. Any error in the certificate of the amount shall not invalidate the lien for the amount actually due.
Ala. Code ? 40-1-2(c) (1975).
This provision sets forth the mechanism by which the Department of Revenue or another agency of the state or county may certify the amount and kind of taxes for which a lien is claimed.? Id.? The Department of Revenue or another agency of the state or county must file with the office of the probate judge a ?certificate of taxes? that identifies the agency of the state filing the lien, the amount of the lien, and the kind of tax claimed, including any interest, penalty, additional amount, together with any costs that may have accrued in addition thereto, the names of all persons against whose property a lien for such tax is claimed and the date of said notice.? Section 40-1-2(c), however, does not apply to the City of Alabaster, even though it is a self-administered taxing jurisdiction. Rather, this section applies to the Department of Revenue and similar agencies collecting state and county taxes.
Section 40-29-1, et seq., of the Code of Alabama is known as the ?Tax Enforcement and Compliance Act? or ?TECA?, and these provisions apply to every public tax, license or fee, and/or penalty levied under the provisions codified in Title 40 or in any other title and is collectible by the Commissioner of Revenue.? Ala. Code ??40-29-1 and 40-29-2 (2011).? The TECA provisions supersede all other specific statutory provisions that may be in conflict.? Ala. Code ??40-29-2 (2011).? Although section 40-1-2(c) addresses liens for taxes generally, section 40-29-20 of the Code is another provision that also requires the filing of notice of the lien for taxes with the office of judge of probate.? Ala. Code ??40-29-20 (2011).
A municipality, pursuant to section 11-51-204 of the Code of Alabama, is authorized to adopt an ordinance to regulate the collection of sales and use taxes as long as such provision is not inconsistent with any rules and regulations which may be issued or promulgated by the Department of Revenue.? This provision states as follows:
- The governing body of a municipality making or enforcing a levy or assessment of taxes under the provisions of this article shall from time to time adopt by ordinance such rules and regulations for making returns and for ascertainment, assessment, collection, and administration of any taxes levied under the provisions of this article as it may deem necessary to enforce its provisions and, upon request, shall furnish any taxpayer with a copy of those rules and regulations,
- Except as provided in this article, any interpretations, rules, and regulations adopted or utilized by the governing body shall not be inconsistent with any rules and regulations which may be issued or promulgated by the Department of Revenue from time to time pursuant to the Alabama Administrative Procedure Act, for the corresponding state tax.
Ala. Code ? 11-51-204 (2008).
Section 11-51-204 falls under Article 3 of Title 11, covering sales and use taxes, and explicitly applies only to ?collection?of any taxes levied under the provisions of this article?.? Ala. Code ? 11-51-204 (2008) (emphasis added). This means that the City of Alabaster may adopt ordinances similar to the provisions contained within section 40-1-2 (c) or section 40-29-29 of the Code Alabama as a remedy for collecting delinquent sales and use taxes.? The City may not use these provisions to assist in the collection of business license taxes.
Your second inquiry references section 40-1-7 of the Code of Alabama and seems to question whether the City may hold the agents of companies personally liable for certain taxes due the City.? Section 40-1-7 of the Code of Alabama provides as follows:
When taxes are levied on the gross or net receipts of any person, company, corporation, or association doing business in this state by any agent, such agent shall be personally liable for such taxes, and the tax collector may collect the same from such agent by garnishment or by the seizure and sale of any personal property belonging to him, as if such taxes were assessed against him.
Ala. Code ? 40-1-7 (1975).
Section 40-1-7 of the Code of Alabama allows for a tax collector to hold the agent of a company personally liable for the taxes due by the company.? This provision specifically references gross or net receipts taxes.? At this time, the State of Alabama no longer collects a gross or net receipts tax.? The Department of Revenue no longer collects taxes pursuant to this provision.? Based on the information provided the City is only authorized to collect a business license and a sales and use tax.? Although section 11-51-204 of the Code authorized the adoption of municipal ordinances as a mechanism for enforcing delinquent sales and use tax assessments, this provision is inapplicable to the assessment, levy or collection of business license tax.
Article 2 of Title 11 has provisions pertaining to business license taxes.? There is no similar provision in Article 2 of Title 11 that allows for a City to pass an ordinance that would regulate the collection of delinquent business license taxes. While your request correctly stated that section 11-51-96 ?provides the City a lien on real and personal property for delinquent business license taxes,? there is no provision available under Article 2 of Title 11 to provide for personal liability of the company?s agent for business taxes, as under section 40-1-7 of the Code of Alabama, or allow for a municipality to adopt an ordinance to pursue personal liability of the agent as a remedy for the delinquent business tax.
CONCLUSION
Pursuant to section 11-51-204 of the Code of Alabama, the City of Alabaster is authorized to pass an ordinance that is similar to or expressly adopts the provisions in either section 40-1-2(c) or 40-29-20 of the Code of Alabama, which would authorize the filing of a Certificate of Taxes Due to collect sales and use, but not business license, tax.
The city may not utilize section 40-1-7 of the Code of Alabama to hold an agent of a company personally liable for the taxes due by the company.
I hope this opinion answers your question.? If this Office can be of further assistance, please contact Gwendolyn B. Garner, Legal Division, Department of Revenue.
Sincerely,
STEVE T. MARSHALL
Attorney General
By:
WARD BEESON, III
Chief, Opinions Section
STM/GBG/MMG/as
2183004/190044