Tuscaloosa Mayor Walt Maddox Sues State Over SSUT Tax Distribution, Citing $14.6M Loss

July 14, 2025 - TUSCALOOSA, AL - In a bold legal maneuver, Mayor Walt Maddox and the Tuscaloosa City Council have filed suit against the State of Alabama, challenging the constitutionality and fairness of the Simplified Sellers Use Tax (SSUT) distribution model. The lawsuit, authorized unanimously by the council in early July 2025, targets the Alabama Department of Revenue and its commissioner, arguing that the current system deprives Tuscaloosa of millions in online sales tax revenue annually.

The SSUT, enacted in 2016, imposes an 8% tax on online purchases. Half of the revenue is retained by the state, while the other half is distributed among Alabama's 463 municipalities and 67 counties based strictly on population-not on where the sale occurred. Maddox contends this model violates basic principles of local governance and economic equity.

"Tuscaloosa should keep what it earns," Maddox said. "Our small businesses should have the same advantages as out-of-state corporations. This is about fairness, and it's about protecting our schools, public safety, and infrastructure."

Financial Fallout

City officials estimate Tuscaloosa will lose $14.6 million in sales tax revenue in Fiscal Year 2025 due to the SSUT structure. The Tuscaloosa City Schools Board of Education has joined the lawsuit, citing a $5 million annual shortfall that has already led to staff reductions and program cuts.

TCS CFO Jay Duke emphasized the severity of the issue:

"We get zero from internet sales tax. That translates into about $5 million a year that we are not getting."

Outgoing Superintendent Mike Daria echoed the urgency:

"As consumer behavior shifts toward digital commerce, our tax structure must evolve to ensure school systems are not left behind."

Legal and Legislative Implications

The lawsuit seeks to reform the SSUT system by implementing destination-based sourcing, which would allocate tax revenue to the locality where the purchase is delivered. Maddox argues that the current model amounts to "local taxation without representation," especially when services like DoorDash and Shipt are classified as "marketplace facilitators" and taxed under SSUT-even when the goods originate from Tuscaloosa stores.

The legal action also reflects growing frustration among Alabama's larger cities. Mountain Brook recently joined the lawsuit, and Mobile Mayor Sandy Stimpson has voiced similar concerns, noting that Mobile lost $34 million in SSUT revenue in 2024 alone.

Political Response and Public Campaign

Maddox has launched a public awareness campaign, including a dedicated website and media outreach, to rally support for SSUT reform. He hosted a summit earlier this year with 50 mayors to discuss the issue and build a coalition for change.

Governor Kay Ivey's office has been contacted for comment, but no official response has been issued as of mid-July.

Editorial note - Tuscaloosa is supported in its efforts by the Big Ten Mayors group. Hundreds of smaller towns and cities meanwhile oppose this effort as a new distribution model would certainly harm them. They argue that regional retail hubs are a dying business model. People increasingly shop from home now. The idea of travel 50 miles or more to shop is alien to a new generation of Americans who order whatever they want from their phone or computer and have it delivered to their home without the hassle of wasting hours traipsing through stores in a faraway city that cannot offer a fraction of the selection available online.

(Brandon Moseley contributed to this report.)