Alabama Code § 40-18-31.2 creates the factor presence standard for business activity in the state to determine nexus for business income tax, business privilege tax and financial institution excise tax. The section stipulates that the threshold amounts may be adjusted periodically consistent with the Consumer Price Index.
A financial institution is deemed to have “substantial nexus” for the tax period in which they exceed the following thresholds for Alabama:
For tax years January 1, 2015 – December 31, 2018:
$50,000 of property,
$50,000 of payroll,
$500,000 of sales, or
25% of the total property, total payroll, or total sales.
For tax years beginning on or after January 1, 2019:
$54,000 of property,
$54,000 of payroll,
$538,000 of sales, or
25% of the total property, total payroll, or total sales.
Financial institutions organized in Alabama or commercially domiciled in this state have substantial nexus in Alabama.