The Alabama Education Association, the state’s largest teachers union, is joining a growing list of Alabama cities suing the state over the Simplified Sellers Use Tax, filing a new lawsuit that argues Alabama’s current online sales tax structure shortchanges public schools.
According to the AEA press release, the organization has formally entered litigation challenging how the state administers the SSUT.
The Simplified Sellers Use Tax is an 8% levy applied to online and remote sales made by businesses without a physical presence in Alabama. Under the existing distribution model, only one-eighth —effectively 1%— flows to the Education Trust Fund, while most of the revenue is routed elsewhere.
By comparison, nearly all state and local sales tax revenue directly supports the Education Trust Fund and local school systems.
As online commerce has expanded, SSUT collections have surged, topping $851 million in 2024, according to the Alabama Department of Revenue. Despite that growth, public schools receive only a small portion of the funds.
“The current application of the SSUT shortchanges Alabama’s local schools,” said Theron Stokes, AEA Associate Executive Director. “Allowing remote sellers to remit the SSUT instead of remitting traditional state and local sales taxes diverts millions of dollars away from the Education Trust Fund and local school systems — money our schools desperately need.”
The lawsuit challenges the Alabama Department of Revenue’s administration of the program, arguing the SSUT is being applied in a way that is inconsistent with state law.
While the tax originally functioned as a stopgap when states were barred from taxing remote sellers, the AEA says legal changes have rendered the current structure outdated and detrimental to public education funding.
The filing states that educators’ interests must be represented as courts consider the future of online sales taxation in Alabama. “When school funding is at risk, AEA will act,” Stokes said. “We will always stand for a tax system that is fair, lawful and ensures public education receives its rightful share.”
