Court Dismisses Alcohol Lawsuit

April 19, 2010
Marshall County Circuit Judge Tim Jolley dismissed a lawsuit against the City of Arab on Friday. The lawsuit, brought by Beverage Warehouse owner Jimmy Helms, claimed the City's alcohol license fee for selling hard liquor and tax were unconstitutional. Jolley set aside the lawsuit after hearing arguments in a summary judgment hearing on April 7th. Jolley also ruled that Helms must pay Arab more than $8,000 in additional taxes that the City said an audit showed that he had underpaid, and more than $1,600 in fines and interest.

Licensing and taxation on the sale of hard liquor is separate from the tax rates set by the State of Alabama for beer and wine. The licensing and tax rates are set by the individual cities. Arab license fee is $5,000 per year and the tax rate is set at 15% on the sale of liquor. Helms claimed that the rates charged by Arab were set too high and gave competitors in other cities an unfair advantage. City attorneys argued that, under prior rulings by the Alabama Supreme Court, cities have the power to adopt tax ordinances and are not limited.

Arab Mayor Gary Beam said the judgment in favor of the city relieves the uncertainty that has plagued the use of the revenues since Helms filed the suit in April 2009. Alcohol revenue funds had been held in a special account due to the uncertainty. Beam said the judgment will allow the city council to begin to use the revenue for city needs.

Helms can ask for a rehearing by Jolley or can appeal his ruling to the Alabama Supreme Court. Helms has not yet indicated whether he will file an appeal.