Millbrook Joins Lawsuit, Seeks to Protect Online Sales Tax Revenue

The Millbrook City Council voted during its regular meeting on December 17 to intervene in a lawsuit challenging Alabama's Simplified Seller Use Tax, known as SSUT. Council leaders said the tax has become a crucial revenue source for the city, and they moved to join other municipalities and counties in defending the existing distribution formula.

SSUT allows eligible online sellers to collect, report, and remit a flat 8 percent sellers use tax on purchases made in Alabama. Four percent of that amount is retained by the state, and the remaining four percent is distributed to local governments. Of the local portion roughly 60 percent is allocated to municipalities and 40 percent goes to counties. Millbrook officials said the local share has provided significant budgetary relief since the tax began generating revenue.

The lawsuit was originally filed on August 12, 2025 by the City of Tuscaloosa, the Tuscaloosa City School System, and the City of Mountain Brook against the Alabama Department of Revenue, arguing that larger cities should receive a greater share of SSUT revenue. The court set a November 10 deadline for other interested parties to move to intervene. Millbrook proposed a resolution on December 9 to join the litigation, citing concerns that any dismissal or change to SSUT could threaten the city’s ability to maintain its current level of public services. The council approved the motion unanimously.

“Keep in mind that several years ago, this money didn’t exist,” said Millbrook Council President Michael Gay. “It is a significant revenue source for the City of Millbrook, about $1.5 million, which has been a game changer for us over the years.” Gay added that joining the suit gave Millbrook a voice in court if the case proceeds. “Joining this lawsuit allows the City of Millbrook to have a chair at the table,” said Gay. “If it does go to court, we will have a say and be able to tell the court what we think about how this affects our community.”

Millbrook Mayor Al Kelley emphasized local concern about larger municipalities dominating the outcome. “I’ve talked to several people about this,” he said. “They all agree that we need to jump into this thing to protect our interests because if we don’t, the big 10 cities are going to eat our lunch.” About 140 cities and towns, along with every county in Alabama, have joined the effort to keep the SSUT distribution unchanged. For Millbrook residents the case could influence funding for municipal priorities, and city leaders say the intervention preserves the city’s opportunity to make that case in court.