Department of Revenue Issues Favorable Ruling for Tax Credit Scholarship Donors - State & Local Tax Alert: Alabama Edition

by Bradley Arant Boult Cummings LLP

Bradley Arant Boult Cummings LLP

Since the landmark Alabama Accountability Act was enacted in 2013, allowing individual and corporate donors to provide scholarship funds for underprivileged children in our state who are zoned for underperforming public schools, there has been some confusion regarding how those donations interact with the estimated tax penalty rules. Many donors and their tax advisers interpreted the Alabama Department of Revenue’s position to mean that they could only donate money to a qualified scholarship granting organization (SGO) in the fourth quarter of the year if they wanted to avoid the risk of estimated tax penalties -- in effect, leaving SGO’s unable to make long-term scholarship commitments.

Thankfully, new Commissioner of Revenue Vernon Barnett and his staff issued Revenue Procedure 2017-01 on August 3 at the request of the Alabama Opportunity Scholarship Fund (AOSF), one of the state’s two largest SGOs. AOSF’s newest board member, Page Stalcup, a senior partner at Wilkins Miller CPAs in Mobile, assisted in the effort along with his tax partner, Frank Brown. “Frank and I were glad to help out on this. Hopefully, it will result in more donations and credits that will help a child get a better education. After all, it’s about the kids,” said Stalcup. The Revenue Procedure was followed by an email clarification to all SGOs from Deputy Commissioner Curtis Stewart on August 14.

The Revenue Procedure provides a safe harbor that allows donors to minimize the risk of quarterly estimated tax penalties. The Revenue Procedure confirms that no penalty will be assessed if the amount of estimated tax payments made to the ADOR by the quarterly due date, plus the amount of creditable donations made to SGOs during that quarter, exceed the total amount of estimated tax payments otherwise required to be made for that quarter. Please consult your CPA for assistance. The good news for 2017 and beyond is that qualified donors may in some cases choose to direct their entire third and fourth quarter Alabama estimated tax payments to an SGO without penalty – a win-win resolution for all concerned, especially the students.

Not only do donations to qualified SGOs provide a dollar-for-dollar Alabama tax credit (up to 50 percent of the donor’s annual income tax liability), but donors should be eligible for a charitable contribution deduction on their federal income tax return. Also, individuals who are subject to the federal Alternative Minimum Tax (AMT) could actually receive a net cash benefit when they donate to an SGO. The procedure for making these donations and donor qualifications are available on the AOSF website and on the ADOR’s helpful website.

In thanking Commissioner Barnett and his staff, AOSF Executive Director Lesley Searcy said: “Our students just want the opportunity to learn, be safe, and succeed. So many are in desperate situations and the scholarship provides the opportunity they need to get on track academically and to feel safe at school. AOSF needs $5 million to commit to our students who are re-enrolling this school year, and an additional $4 million to move students off the waiting list. We hope corporate and individual taxpayers will take advantage of this new opportunity to support low income students through their 3rd and 4th quarter estimated tax payments.”

*The authors’ law firm was involved in seeking the Revenue Procedure and clarifying email on behalf of AOSF and one of firm’s corporate clients.

Jimmy Long Appointed SALT Practice Team Chair

Bradley tax partner Jimmy Long has been appointed by the firm’s Board of Directors to succeed Bruce Ely as chair of the SALT Practice Team, while Bruce continues to serve in his roles at the national level. “I am honored and humbled to be leading our SALT Practice Team and following in Bruce’s footsteps,” said Long. The team represents taxpayers in multiple states, including Alabama, Tennessee, and Mississippi, before the state and local taxing authorities, as well as the trial and appellate courts of those states and before the U.S. Supreme Court.

Jimmy holds a Master of Laws (LL.M.) in Taxation from New York University School of Law, a J.D. from the University of Alabama School of Law, and a finance degree from Auburn University. Jimmy and his wife, Claire, have two sons, Jay (3) and Grier (1).

Chris Grissom named “Lawyer of the Year” for Alabama Tax Litigation

Birmingham partner Christopher R. Grissom was named as a “Lawyer of the Year” for Alabama Litigation and Controversy – Tax in the 2018 edition of The Best Lawyers in America®.

Lawyers on The Best Lawyers in America list are divided by geographic region and practice areas. Only a single lawyer in each practice area and designated metropolitan area is honored as the "Lawyer of the Year," making this accolade particularly significant. Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, their professionalism, and their integrity. In addition to this recent honor, Chris has been ranked in Best Lawyers for Tax Law since 2009.

Upcoming Seminars and Events

August 29, 2017 – Annual Meeting of the Alabama State Bar Tax Section in Montgomery, Alabama. Bruce Ely, Will Thistle and Jimmy Long are each presenting at the meeting.

October 1-4, 2017 – Annual Meeting of the Western States Association of Tax Administrators (WSATA) in Missoula, Montana. Bruce Ely will be part of a panel presentation on the state taxation of pass-through entities and how the states should deal with the new federal partnership audit rules, including an overview of the model act which Bruce and Will Thistle helped co-author. For more information, visit

October 6, 2017 – The Alabama Society of CPAs, Birmingham Chapter – Recent Alabama Tax Developments at The Club in Birmingham, Alabama. Bruce Ely, Jimmy Long, Will Thistle, and Chris Grissom will be presenting.

October 22 – 25, 2017 – Annual Meeting of the Council On State Taxation (COST) in Orlando, Florida. Bruce Ely will be participating in a panel presentation discussing the state implications of the new federal partnership audit rules and the model act that is being advocated by COST, ABA, AICPA, TEI and several other interested parties. Chris Grissom will be discussing recent Alabama tax developments. For more information, visit


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bradley Arant Boult Cummings LLP | Attorney Advertising

Written by:

Bradley Arant Boult Cummings LLP

Bradley Arant Boult Cummings LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.