Jefferson County tax refunds up to supreme court

(April 7, 2010, photo source WBRC-TV)
(April 7, 2010, photo source WBRC-TV)

By Alan Collins

MONTGOMERY, AL (WBRC) - Refunds for Jefferson County workers will depend on the Alabama Supreme Court.

Wednesday, six of the nine justices on the court listened to arguments over possible refunds from those who paid the job tax after it was declared illegal in 2009. Three of the justices removed themselves because they live in Jefferson County.

Attorneys for the county said that language in the current occupational tax law, passed in August 2009, prevents the county from having to pay refunds on the old tax declared illegal in January 2009. However, attorneys who filed the lawsuit that struck down the old tax argued the state constitution prohibits legislation interfering in any lawsuit or litigation.

"If the Supreme Court adheres to the constitution, the taxpayers win," said attorney Jim McFerrin, one of the attorneys suing the county. "If the court decides to look the other way or reads something into it, taxpayers won't win."

Dekalb County Judge David Rains, in January 2009, declared the county's occupational tax illegal and ordered the county to pay up to $50 million in refunds to people working in Jefferson County who paid the occupational tax.  However, the Alabama legislature passed a new version of the tax in August 2009, adding a clause declaring the previous version of the tax legal.

"We do feel the new tax does take care of the tax, retroactively," Bettye Fine Collins, Jefferson Co. Commission President said. "I feel good about the situation."

Collins said if the county loses the fight over the refunds it could cost the county $50 million.

"If we lose the tax, then our economic development effort will if not totally removed but will be reduced," Collins said.

Collins said paying refunds could also lead to county workers being laid off and long lines again at the counthouses.

McFerrin said those who paid the tax should get refund.

"We are in a recession," McFerrin said. "Taxpayers need money."

Even if Jefferson County wins the legal fight over the refunds, another lawsuit has been filed which claims the new job tax is unconstitutional and should also be declared illegal.

"We can't get over the fact the didn't follow the law passing the act," attorney Clay Lowe said. "We can't ignore that."

Lowe said the new tax was not passed properly, not enough advertising was given to the bill before the legislature passed it.

The county is moving to dismiss the lawsuit in a court hearing set for Monday. Collins said the legal drama shows the need for the state legislature to give the county more taxing authority.

"We need a new constitution," Collins said. "We need home rule. Birmingham doesn't have a problem with the tax. No one is challenging it because they passed it. They have home rule."

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