Hoover has joined a growing coalition of Alabama cities challenging the state’s administration of the Simplified Sellers Use Tax (SSUT), following the Hoover City Council’s unanimous vote.
The action places Hoover alongside Mobile, Tuscaloosa and Mountain Brook in a legal effort arguing that Alabama’s current online sales tax distribution model diverts revenue away from communities that generate it.
Mayor Nick Derzis said the move to join the lawsuit addresses what he describes as significant revenue losses caused by the state’s population-based distribution formula.
“Hoover residents generate millions of dollars in online sales tax revenue every year, yet much of that money is being redistributed across the state instead of coming back home to support our own community,” Derzis said. “We are conservatively losing between $7 million and $10 million annually under this system.”
Alabama assesses an 8% SSUT on most online purchases, but unlike traditional sales tax, the revenue is not returned to the jurisdiction where the purchase originates. Instead, funds are distributed largely by population. Cities with strong retail sectors and high online purchasing activity argue that the model penalizes them and fails to reflect where commerce actually takes place.
“Hoover has one of the most robust retail markets in Alabama. We are a regional economic driver,” Derzis said, adding that local taxpayers “deserve to have their dollars reinvested in the community where they live, work and spend.”
Several cities have recently joined the lawsuit. Mobile officials reported their city is losing an estimated $34 million annually under the SSUT structure, while Tuscaloosa and Mountain Brook have stated similar concerns. Derzis said the growing number of participants highlights a statewide problem rather than isolated financial disputes.
“This is a structural problem that undermines local government across the state,” he said. “By joining this lawsuit, Hoover is standing with communities that want a fair, transparent and accountable system.”
Derzis said the city’s decision is aimed at ensuring long-term financial stability rather than engaging in political conflict.
“This is about doing what is right for Hoover’s future,” he said. “Joining this lawsuit is the responsible thing to do, and I am hopeful for a positive outcome for all Hoover residents.”
Sherri Blevins is a staff writer for Yellowhammer News. You may contact her at [email protected].
