Gov. Bob Riley’s attorneys are in state appellate court saying Alabama cannot afford to pay millions of dollars in franchise tax refunds to hundreds of companies that have been waiting for their overpayments since 1999.
Meanwhile, attorneys for the state Department of Revenue argue in the Court of Civil Appeals that fiscal hardship is the reason Alabama cannot refund illegally collected franchise tax payments.
As the court proceedings continue, money to pay the refunds sits in an escrow account.
The franchise tax refund escrow account will have $142 million by Sept. 30, but the Legislature is using that money to balance next fiscal year’s General Fund, according to state figures.
The action further escalates the bad feelings that have been lingering since 1999 from the franchise tax issue. At the same time, large, out-of-state corporations question whether Alabama is a viable place to expand and add jobs.
“Alabama has done quite an amount of foot dragging on this,” said Douglas L. Lindholm, president and executive director of Council on State Taxation in Washington. “A lot of (corporations) are upset. Alabama dragging (its) feet on paying refunds impacts how companies view Alabama.”
The taxation council represents more than 600 of the nation’s largest companies on tax and policy issues. The list includes Fortune 500 companies such as General Electric, Johnson & Johnson, Coca-Cola, Sprint, Chevron Corp., Microsoft Corp. and Wal-Mart, according to the council’s Web site.
“Our concern is not the level of tax but with equitable and nondiscrimination in state taxes,” Lindholm said.
When asked to comment about Lindholm’s assessment of Alabama’s business climate and the fact that money is available to pay refunds, state Finance Director Jim Main said, through a spokeswoman, “The finance director did not include that in any of his revenue projections.”
Photo from Stock.xchng.
danakeith on July 8th, 2008 at 6:12 am
well, this is usually the problem.. they should take a better step on these.