Montgomery, Ala. — The City of Montgomery has agreed to voluntarily dismiss its legal challenge to the state’s handling of the Simplified Sellers Use Tax (SSUT) to give legislators an opportunity to fix a system that threatens critical funding for Alabama cities.

In December, Montgomery was one of several municipalities that joined a lawsuit filed by the City of Tuscaloosa challenging the state’s handling of SSUT. At the request of Alabama’s legislative leadership, Montgomery and other cities will now voluntarily dismiss their claims to pursue a more immediate legislative solution during the 2026 Regular Session.

By dismissing its legal challenge without prejudice, the City of Montgomery is engaging in good-faith negotiations with the Legislature while preserving its ability to reassert its legal rights should those discussions fail to produce a meaningful and timely resolution.

Mayor Steven Reed views the current legislative session, which concludes March 27, as a critical opportunity to find an equitable resolution to this program.

 “Our position has always been clear: the current SSUT framework is outdated and unfair,” Mayor Reed said. “We believe the Legislature has an opportunity this session to modernize the system and ensure that communities like Montgomery receive their fair share. We’re committed to working with lawmakers to create a solution that reflects today’s marketplace and protects local revenue.”

Established in 2015, SSUT applies a flat, statewide 8 percent tax to online sales, regardless of where the purchaser lives. At the time, the program was created to address the practical difficulty of collecting sales tax from online retailers. Since then, federal case law has evolved, and nearly every other state has modernized its system to reflect today’s marketplace. Alabama has not.

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