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FAQ

Tax License Renewal  Filing & Payments  Misc Questions  Petition for Refund  Taxes Administered  Assessments  Exemptions  Other Information

Forms

All forms mentioned in this FAQ can be found through the Forms Search.

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Tax License Renewal

Do I have to renew my Alabama Tax License?

Yes, beginning November 1, 2020, businesses that hold an Alabama Sales Tax, Rental Tax, Sellers Use Tax, Lodgings Tax, Simplified Sellers Use Tax and/or Utility Gross Receipts Tax account(s) will be required to renew those licenses annually for the next tax year.  One renewal process will update all of the required licenses for that entity.

Is the Tax License the same as the business license renewed in October each year?

No.  A Tax License is separate from a business license. The Tax License and its associated tax account is the number required to file and pay the taxes each month.

When can I renew my Alabama Tax License?

The link to renew your Tax License will be available in your My Alabama Taxes (MAT) account at https://myalabamataxes.alabama.gov (where you file your taxes) beginning on November 1st of each year.  You will have through December 31st to renew your Tax License for the following year

Where do I renew my Alabama Tax License?

In November/December of each year, you will renew the Tax License through your My Alabama Taxes (MAT) account: https://myalabamataxes.alabama.gov, click on the tax type to renew and the “Renew license” link will be located in the “I Want To” section at the top.

Does it cost anything to renew my Alabama Tax License?

No, there is no cost for the renewal of the Alabama Tax License.

What information is required to complete the annual Alabama Tax License renewal?

The following information will be reviewed and should be updated if there are any changes:

  • Current Legal Name – must be reviewed
  • Owner/Officer/Member Information – must be reviewed and/or updated
  • Phone number(s) – must be reviewed and/or updated
  • Social security numbers/FEIN’s – must be reviewed
  • Main address and location address(es) including DBA’s for each location – must be reviewed and/or updated

Can my accountant or third-party tax filer renew my Tax License?

Yes, if they normally file the taxes for that tax type (Sales Tax, Rental Tax, Sellers Use Tax, Lodgings Tax, Simplified Sellers Use Tax and/or Utility Gross Receipts Tax), then they have the ability to renew the Tax License for you.  They will need to have all of the required information from you to renew the Tax License properly.

What happens if I do not renew my Alabama Tax License during the allowed time?

The tax account associated with that Tax License will be closed and the license will no longer be valid for use.  Once the account is closed, you will need to reapply to open the account.  For businesses that sell beer, wine and/or tobacco products, a new application may require a surety bond.

What do I do if I have had a change in entity or have LLC members to add or remove?

A new entity type will require a new application be submitted for that entity.  Updating LLC members information will be done on the Officers page during the license renewal process.  For both of these type of changes, remember to follow through with providing the properly executed documents to update the Alabama Secretary of State: https://www.sos.alabama.gov/business-entities.

Will I be mailed my new Alabama Tax License?

No, the Tax License will be available for download or printing in your MAT account.  To access the Tax License, login to your MAT account, click on the account type and under the “I Want To” section, click the “Print license” or the “Print license for next year” link, whichever is appropriate or available at the time.  If the license renewal is done before 4:00 p.m. CT, the “Print license for next year” will be available in the “I Want To” section on the next business day; if the renewal is done after 4:00 p.m. CT, the link will be available on the second business day.

Who can I contact to get help with my renewal or if I have questions?

You may call 334-242-1490 or send a message through your My Alabama Taxes account; go to the tax account and then click on the “Ask a question” link.  You may call your local taxpayer service center for assistance;  locate your local taxpayer service center at:  https://revenue.alabama.gov/taxpayer-service-centers/. Or, you may send an email to: annuallicenserenewal@revenue.alabama.gov.

Filing and Payments

Am I required to pay my taxes electronically?

Yes. Business taxpayers are required to file their returns electronically using My Alabama Taxes (MAT). Rule 810-1-6-.01 entitled “Electronic Filing and Payment Through Department Provided Filing and Payment Systems” mandates electronic filing.  Pursuant to Section 41-1-20, Code of Alabama 1975, payments that are $750 or greater are to be made electronically through an Electronic Funds Transfer (EFT) method. EFT ACH Debit is the preferred  and default EFT payment method in MAT. EFT ACH Credit payments are allowed if pre-approved by the Department. Learn more about making EFT payments.

Does Alabama have a sales tax holiday?

Yes, Alabama has two sales tax holidays. A “Back-To-School” Sales Tax Holiday beginning at 12:01 a.m. on the third Friday in July, and ending at twelve midnight on the following Sunday, pursuant to 40-23-210 through 213, Code of Alabama, 1975. And a “Severe Weather Preparedness” Sales Tax Holiday beginning at 12:01 a.m. on Friday of the last full weekend in February and ending at twelve midnight on the following Sunday, pursuant to 40-23-230 through 233, Code of Alabama, 1975.

A county or municipality may, by resolution or ordinance adopted at least 30 days prior to the weekend of the sales tax holiday, provide for the exemption of “covered items” from county or municipal sales or use taxes during the same time period, under the same terms, conditions, and definitions as provided for the state sales tax holiday. Learn more about the sales tax holidays.

Can I file my returns online for free?

Yes. Online filing through the Department’s filing and payment system is FREE of charge. Rule 810-1-6-.01 mandates that all Department of Revenue taxes, fees, and licenses, and their corresponding returns or documents are to be electronically submitted. Learn more about online filing

Am I required to file my sales tax returns electronically?

Yes. Business taxpayers are required to file their returns electronically using My Alabama Taxes (MAT) . Rule 810-1-6-.12 entitled “Electronic Filing and Payment Through Department Provided Filing and Payment Systems” mandates electronic filing for all Department of Revenue taxes, fees, and licenses, and their corresponding returns or documents.

Can I pay my tax liability via EFT?

Yes. In 1990, Alabama’s Legislature directed the Department to implement an EFT (Electronic Funds Transfer) program. EFT is less costly than manual check processing and is convenient and quick. For those state and state-administered local taxes required to be filed electronically through My Alabama Taxes (MAT) , and for the non-state administered local taxes that may be filed through MAT/ONE SPOT, your EFT ACH debit method payments are made in conjunction with filing your return.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Learn more about EFT

How do I amend a return?

If you discover that you have made an error on a sales tax report previously filed with the Department, you should amend the return.

  • If it is a state tax return, you may log into your My Alabama Taxes (MAT) account and click on the applicable account. Then click the blue hyperlink of the period you want to amend. Next click on the blue hyperlink “File or view a return” and then click on the blue hyperlink “Amend Return”. The return will open for editing. Enter the correct information and submit the return. The return will display the total amount due without consideration of any amount you previously paid. So, if you are amending the return because you owe more taxes, when you get ready to make the payment, remember to deduct the amount you previously paid for that particular tax period. The amount showing due on the payment page is an editable field. Once the amended returned is processed, the amounts will reconcile, and MAT will update in a few days. If you are amending the return because you previously overpaid, the amended return will be processed, and a credit should post to the account in a few days.
  • If you need to amend a local return, you can use a copy of your original return or contact the Department of Revenue at (334) 242-1490 to request a blank form to make the corrections to the applicable period. The report form should be marked “AMENDED” and write the Confirmation Number assigned to the original tax return on the amended return. Forward the return to the Department with any additional tax, penalty and interest due.

Send amended returns to the following address:

Alabama Department of Revenue
Sales & Use Tax Division
P. O. Box 327710
Montgomery, AL 36132-7710

This same procedure should be followed for all other tax returns administered by the Sales and Use Tax Section of this Division.

NOTE: If you need to amend a Nonstate Administered local return that was filed through My Alabama Taxes (MAT), you should contact the administrator of the locality for instructions. View contact list of  Nonstate Administered localities 

 

If I am not required to pay electronically, where do I mail my payment?

If you are not required to pay electronically and choose to mail a check, tax payments for returns filed through the My Alabama Taxes (MAT) system should be mailed to:

Alabama Department of Revenue
Sales & Use Tax Division
P. O. Box 327790
Montgomery, AL 36132-7790

All check payments should include the following information: account number, filing period, and Confirmation Number (do not mail a copy of the return filed electronically).

Miscellaneous Questions

What guidance is there for vendors drop-shipping into Alabama and remote sellers?

The State of Alabama does not issue sales tax licenses (resale certificates) to remote businesses (no business locations in Alabama).  Alabama views drop-shipping as two separate transactions.  The transaction between the vendor/drop-shipper and reseller is one transaction, and the transaction between the reseller and the Alabama customer is a separate transaction.  It is Alabama’s stance that the vendor/drop-shipper should accept the home-state issued resale certificate when the reseller is purchasing to resell to a customer located in Alabama (drop-shipped to an Alabama address).  If the sale between the remote reseller and the Alabama customer is considered taxable, the remote reseller is responsible for collecting and remitting taxes to Alabama.

Rule 810-6-1-.144.03: All buyers of retail property for resale purposes are entitled to purchase at wholesale, tax-free, the property they resell as a regular course of business when they have secured the sales tax license required by law.  This rule also applies to retailers located outside Alabama when they have secured the sales tax license required by law in the state in which they are located.  (Section 40-23-6) (Adopted August 10, 1982, readopted through APA effective October 1, 1982)

Are sales of goods made via the internet taxable?

Yes, they are taxable.

  • On-line retail sellers located outside Alabama: The retail sale of goods made over the Internet that are delivered into Alabama from an out-of-state seller are treated the same as the retail sale of tangible personal property made through more traditional channels, with the same “nexus” rules applying to both. A retail vendor has “nexus” in Alabama if they have a physical presence in Alabama, such as a retail store, warehouse, inventory, or regular presence of traveling salespeople or agents, or has established remote entity nexus. If the retail vendor has nexus in Alabama, the tax reporting responsibility lies with the retail vendor to register with the ADOR to charge, collect and remit the appropriate Sellers Use Tax to the ADOR (Local sellers use taxes also apply and should also be charged, collected and remitted to the appropriate administering authorities). If the retail vendor does not have nexus with Alabama, the tax reporting responsibility passes to the consumer/purchaser and they would be responsible for self-assessing the use tax and remitting it via a consumers use tax return to the ADOR and to the appropriate administering authorities. (To report use tax to the state, file and pay the Consumers Use Tax Return electronically through My Alabama Taxes (MAT).   If you do not have a valid consumers use tax account number, and only need to report and pay for a one-time purchase, you will need to register for a consumers use tax account through MAT’s Account Registration.  Once the return has been filed and taxes paid, you can close the account by logging back into MAT and click the “Ask a question” link and request through that contact method that the consumers use tax account be closed as it was only need for a one-time filing. However, please note that some retail vendors that do not have nexus in Alabama elect to register with the ADOR on a voluntary basis to charge, collect and remit the Simplified Sellers Use Tax to the ADOR as a convenience to their customers.
  • On-line retail sellers located in Alabama: The retail sale of goods made over the Internet by Alabama retailers to Alabama customers are subject to Alabama Sales Tax. The tax reporting responsibility lies with the Alabama retail vendor to charge, collect and remit the Sales Tax on such sales, as these sales are treated the same as the retail sale of tangible personal property made through more traditional channels. Local sales tax or use tax also applies and should be remitted to the appropriate administering authorities.

If Alabama residents purchase items through mail order sales or other direct marketing alternatives, are these sales taxable?

Yes. Retail sales of tangible personal property delivered into Alabama from an out-of-state location are subject to Alabama use tax, regardless of the method of ordering the item – i.e. via mail-order catalogs, cable tv shopping, the Internet, by telephone, etc. If the out-of-state seller has “nexus” in Alabama, the tax reporting responsibility lies with the retail seller to register with the ADOR to charge, collect and remit the appropriate tax to the ADOR. (A retail vendor has “nexus” in Alabama if they have a physical presence in Alabama, such as a retail store, warehouse, inventory, or regular presence of traveling salespeople or agents, or has established remote entity nexus.) If the retail seller does not have nexus in Alabama, the tax reporting responsibility passes to the consumer/purchaser and they would be responsible for self-assessing the use tax and remitting it to the ADOR via a consumers use tax return electronically through My Alabama Taxes (MAT). However, please note that some retail vendors that do not have nexus in Alabama elect to register with the ADOR on a voluntary basis to charge, collect and remit the Simplified Sellers Use Tax to the ADOR as a convenience to their customers.

Over Collections Law

According to Section 40-23-26(d), Code of Alabama 1975, any over collection of sales tax by a retailer from the customer must be paid to the State unless such over collection results solely from rounding the correct amount of tax upward to the nearest cent. Over collections of local sales tax must be reported and paid on your local sales tax return in the same manner as over collections are to be reported on your State sales tax return.

How do I apply or register for a sales tax number?

Read the Instructions prior to registering so that you will be prepared with the information required for registering. When you are done, click on the I Agree button at the end of the process and you will receive a confirmation number. If there are no problems with the application and you have selected the e-mail option, you should receive your account number within two to three days. A license will be mailed to you later. Read the Entity Registration Instructions

Other account numbers that you may need, such as Rental Tax, Lodgings Tax, Sellers Use Tax, Consumers Use Tax, Mobile Communications Services Tax, Utility Service Use Tax, Utility Gross Receipts Tax, Utility Excise Tax, Pharmaceutical Provider’s Tax, Alabama Nursing Home Privilege Tax and Income Tax Withholding, can be applied for using the online process.

Access Business Tax Reference Materials

Am I required to obtain a surety bond when registering for a new sales tax license?

Taxpayers who will be selling beer, wine and tobacco products are required to purchase a one-time surety bond when registering for a new or the renewal of an Alabama sales tax license.  The surety bond shall be in the amount of $25,000 and maintained for a two-year period.

The Sales Tax Surety Bond (S&U:BOND) and Instructions for Executing the Sales Tax Surety Bond (S&U:BOND Inst) may be found on the Department of Revenue website at:   https://revenue.alabama.gov/forms  

Taxpayers who will not be selling beer, wine and tobacco products are not required to obtain the surety bond.

Am I required to register for a sales tax number if I only make wholesale sales?

Wholesale automotive dealers are required to have a sales tax number to obtain and maintain their Master Dealer License.  Other wholesale businesses do not require a sales tax number; however, you can contact the Sales and Use Tax Administration Section, or any Taxpayer Service Center to determine if a Certificate of Exemption, Consumer’s Use Tax number, or other registration is required.

What other licenses am I required to have?

You may also be required to purchase a State/County Business License (i.e. Privilege License). Please contact the Judge of Probate’s office in the county in which your business is located. You may also be required to purchase a City Business License from the City in which your business is located. Learn more about Business Licensing

Do I need to file a sales and/or sellers use tax return for a month in which I had no sales?

Yes. Once an account has been established for your business, no matter what type of tax account you have, a tax return must be filed for each month even though no tax is due.

Are non-profit organizations exempt from sales and use taxes?

No. Charitable and nonprofit organizations and institutions, per se, have no special exemption from the sales and use taxes. However, some non-profit and charitable organizations may be exempt from sales and/or use taxes by special Acts passed by the legislature (See Rule 810-6-3-.07.05).

Are churches exempt from sales and use taxes?

No. Religious organizations and institutions, including churches, church hospitals, etc., are not exempt from the payment of sales and use taxes.

If I have several locations in Alabama, do I need separate sales tax numbers for each location?

If the legal ownership of the locations is the same, only one state sales tax number will be assigned. Sales should be combined and reported on one return.

The above is also true if the location is within a municipality and/or county that the state provides tax administration, only one local tax number will be assigned by the state. If the location is within a municipality and/or county that is not administered by the state, you will need to contact the locality or their tax administrator to register for a local tax account number. Access Local Government Contact Information

What type of sales are made where no sales tax is due?

  • Sales of Exempt Items: Some of the more common items which are exempt are: prescription drugs, gasoline and motor oil (kerosene and fuel oil are taxable), fertilizer/insecticides/fungicides when used for agricultural purposes, seeds for planting purposes, feed for livestock and poultry (not including prepared food for dogs and cats), baby chicks and poults, livestock, sales to the U.S., State of Alabama and other governmental agencies of the State of Alabama, labor to repair or install property is exempt as long as it is billed as a separate item on the customer’s invoice (labor to fabricate an item is not exempt). Note: cigarettes and beer are not exempt from sales or use tax.
  • Sales to Exempt Organizations: Sales made directly to the federal government, the State of Alabama and counties and cities within the State; sales made directly to Schools (not daycares) within the State; sales made to City and County owned and operated hospitals and nursing homes; sales made to some non-profit agencies that have been specifically exempted by the Alabama Legislature – examples include but are not limited to Alabama Sheriffs Boys Ranch, Boy Scouts & Girl Scouts of America. Note: Not all non-profit organizations are exempt.
  • Sales Paid For With Food Stamps: The exemption applies only to items which are actually purchased with food stamps. All other purchases by food stamp program participants remain subject to sales tax.
  • Wholesale Sales (Sales for Resale): Sales made to licensed retail merchants, jobbers, dealers, or other wholesalers for resale.

If I change the name of my business, will my tax number change?

If you are changing the trade name or “doing business as” name of your business, your sales tax number will not change – you will need to contact the ADOR at 242-1490 or you may e-mail ADOR the change so that a notation may be made regarding the change in trade name or “doing business as” name. However, if the change is deemed to be a change in legal entity, new numbers will be assigned. For example, if you change from a proprietorship to a partnership or a corporation, this is a change in the legal entity. A new Application will be required and a new sales tax number will be assigned. You may complete the application electronically at: https://revenue.alabama.gov/salestax/register.html

How do I change the location or mailing address of my business?

If you are merely changing the mailing address or a location address, log into your My Alabama Taxes (MAT) account and click on the blue “Address” hyperlink midway the page and follow the prompts. A web request will be sent to the Entity Registration (ERU). ERU will issue you an updated license in 2 to 3 days if applicable, otherwise, your account information will simply be updated. You will be able to review the updates in MAT in 2 to 3 days.

How do I close my sales tax account?

Log into your My Alabama Taxes (MAT) account and send a request by clicking on the sales tax account. Then click on the “Ask a question” link in the “I want to” section.  Remember to provide the effective date of the business closure.  Please bear in mind, accounts will not be back dated beyond the current period due and all delinquent returns must be filed.

How do I request a waiver of a penalty on a tax return filed after the due date?

Log into your My Alabama Taxes (MAT) account and send a request by clicking on the applicable tax account. Then click on the “Ask a question” link in the “I want to” section. You must provide a valid explanation of the reason you are requesting a waiver. Your account will be reviewed, and an agent will reply back to you.

Are freight charges taxable?

According to Rule 810-6-1-.178, if delivery is made in the sellers own vehicle, or in equipment leased by him, the transportation charges are subject to sales or use tax. If delivery is made by common carrier or the U.S. Postal Service, the transportation charges shall not be subject to sales or use tax if billed as a separate item and paid directly or indirectly by the purchaser. To be excluded from the measure of tax, these transportation charges must be separate and identifiable from other charges.

Who do I contact to obtain an abatement?

Abatements are authorized to be granted by the governing body of:

  • a municipality for private use industrial property located within the corporate limits of the municipality or within the police jurisdiction of the municipality
  • a county for private use industrial property located in the county and not within a municipality or its police jurisdiction, unless consented to by resolution of the governing body of the municipality
  • a public industrial authority for private use industrial property located within the jurisdiction of the public industrial authority

Once an abatement of sales and use taxes has been granted, what is the next step?

The private user should send a copy of the executed abatement agreement, a certified resolution by the public body, the combined application for abatement (Form CO:CAA) and the certificate of exemption application form (Form ST:EX-A2) to the Department of Revenue at the following address within 90 days after the abatement is granted: Alabama Department of Revenue, Commissioner’s Office, ATTN: Abatement Program Director, P.O. Box 327001, Montgomery, AL 36132-7001. Learn More about Abatement Procedures

What qualifies as a major addition for abatement purposes?

Any addition to a qualifying existing industrial development property where the amount to be invested equals or exceeds 30% of the original cost of the existing land, building and equipment or $2,000,000.

Access Business Tax Reference Materials

Debit Block How do I make a payment for ACH Debit method e-payments?

Enter Your Banking Information on the payment page:

  • Checking or Savings: Select whether your bank account is a checking or savings account.
  • Routing Number: Enter your bank routing number.
  • Account Number (numbers only): Enter your bank account number. Be extremely careful to enter your entire bank account number correctly. Verify the number you have entered prior to authorizing payment. Entering an incorrect bank account number and/or entering alpha characters can cause the payment to be rejected, causing penalty and interest to be assessed against your company.

Note: If you have debit block on your bank account, please provide the following information to your bank so that your bank will allow the tax payment(s) to be processed without rejecting:

ADORCCD000 (Company ID #) for Alabama Department of Revenue Payments
2621862182  for Company ID #’s for Self-Administered Jurisdiction Payments

Payment Date: Payment Date is the date the payment will be sent to your bank. This date will default to the current date if payment is authorized prior to 4:00 p.m. CST, or the next day if payment is authorized after 4:00 p.m. CST. The Payment Date is editable if your payment is for a current return and is initiated before the Remit Due Date. In this case, you can choose to warehouse your payment up to the Remit Due Date.

If you wish for the payment to not be deducted from your bank account until the due date, you must edit the payment date field and enter that date. You can change this date to any date from the default Payment Date up to the remit due date. Unless you select a later date, the payment will be deducted from your bank account the next business day and paid directly to the government entity(s) listed under Pay To The Order Of.

Due Date: Due Date is the last date in which the payment is due before it is considered delinquent. PLEASE NOTE: To be considered timely paid an EFT payment must be transmitted by 4:00 p.m. CST on or before the Due Date so that the funds are immediately available to the State on the first banking day following the due date of payment.

Remit Due Date: Remit Due Date is the date in which you must submit the return for the EFT payment to be considered timely paid.   NOTE: To be considered timely paid an EFT payment must be transmitted by 4:00 p.m. CST on or before the Due Date so that the funds are immediately available to the State on the first banking day following the due date of payment.

Early Filing and Payment, and Warehousing the Payment: If you make your payment prior to the Due Date, the payment will be deducted from your bank account the next business day. However, you can choose to warehouse your payment up to the Remit Due Date so that the payment is not deducted from your bank account until the date you specified.

If you wish for the payment to not be deducted from your bank account until the DUE DATE, you must edit the payment date field and enter that date. You can change this date to any date from the default Payment Date up to the remit due date. Unless you select a later date, the payment will be deducted from your bank account the next business day and paid directly to the government entity(s) listed under Pay To The Order Of.

Late Filing and Payment: If your return and payment are not timely filed and paid, you will be billed the appropriate interest and penalty. You cannot edit the Payment Date field for late payments. The payment will be deducted from your bank account the next business day from the Payment Date.

Pay To The Order Of:

  • Alabama Department of Revenue Payments: Payments to Alabama Department of Revenue will be made directly to the State of Alabama’s bank account.
  • Self-Administered Jurisdiction Payments: Payments to self-administered jurisdictions will be processed and transmitted to the self-administered jurisdictions’ bank account and NOT to the State of Alabama’s bank account. You cannot cancel EFT payments made to self-administered jurisdictions through this System once the return with payment has processed.

Amount: The payment amount that will be deducted from your bank account.

Click the Continue button to verify the payment. Once verified, click the Authorize button to initiate the payment and receive your confirmation number.

What is bulk filing?

Bulk Filing is a method for third party tax preparers to submit multiple clients’ returns in a single file upload. To receive Third Party/Bulk Filing Status, you must submit the Third Party/Bulk Filing Application. Once approved, you will receive an “Agent” account that you can use to sign on to the MAT system. With an Agent account, and your client’s approval, you will be able to file returns and submit payments on your client’s behalf using a single login. There are two options for filing and paying returns using your MAT login. You can enter the information on the return form on each of your client’s accounts or you can create text files, by tax type, that contain your client’s return and payment information for uploading to the system.

What is the bulk filing Return Form Method?

Before you can enter your client’s return information using the tax return form your client must first set their account to allow third party logons. Then you must add your client’s account to your Account List by logging on to MAT and clicking the “Add Access to Another Account” link on the left side of the Home screen. Then you will need to enter your client’s tax account number, E-file Sign on ID, E-file Access Code and the third party password that your client created when setting their MAT profile to allow third party logons. Once the account is added you can access it by clicking the account number link on the accounts list.

What is the Bulk Upload Method?

The Bulk Upload method allows you to create a comma delimited text file for each tax type that contains your client’s return and payment information to upload to the system. These files can be created using a spreadsheet program (i.e., Excel) and saved as a comma delimited text file with either a .txt or .csv file extension. A separate file is required for each tax type using the following layouts. Note: If a header row is used during the creation of the file it should be removed prior to uploading since the system will begin importing with the first row of the file. Learn more about Bulk Filing

Petition for Refund

I overpaid taxes on my return. I have a credit on my account, will you automatically send me a check?

No, the Sales and Use Tax Division does not automatically issue a refund check. You will need to complete a petition for refund form.

How do I get a refund? Where do I find the form?

You will need to complete either a Direct Petition for Refund (ST-5) or a Petition for Refund of Taxes Paid to Seller (ST-6). The forms are found on the department’s website at  https://revenue.alabama.gov/forms/?d=sales-use.

Which refund petition form am I required to submit?

You will submit a Direct Petition for Refund Form ST-5 if the overpayment of taxes was submitted directly to the department by you. The Direct Petition for Refund Form ST-5 can be found at https://revenue.alabama.gov/wp-content/uploads/2017/05/ST5_dirpet.pdf.

You will submit a Petition for Refund of Taxes Paid to Seller Form ST-6 if the overpayment of taxes was made to a vendor who submitted the taxes to the department. Petition for Refund Taxes Paid to Seller Form ST-6 can be found at https://revenue.alabama.gov/wp-content/uploads/2017/05/ST_6JtPet.pdf.

 Can I submit the petition for refund form and documentation by email?

Yes, the petition for refund and documentation may be emailed to strefundsection@revenue.alabama.gov.

What address should the petition for refund and documentation be mailed to?

The form should be mailed to the Alabama Department of Revenue, Sales and use Tax Division, Refund Section, P.O. Box 327710 Montgomery, AL 36132-7710.

What documentation do I need to send with the petition for refund?

Your petition must be documented. The petitioner should attach invoices, receipts, check copies, accrual records, copies of returns, and other documentation to the petition sufficient to provide an audit trail. If invoice copies are not attached, then a schedule of the invoices providing invoice date, invoice number, invoice amount, and a description of the merchandise should be attached. No refund will be issued unless proper documentation is attached.

How long will it take the department to issue me a refund check?

The time required to process a petition for refund will depend on the amount of the refund and the amount of documentation received. Any petition for refund over $25,000.00 or a large amount of documentation will require more processing time. The Department has 6 months to approve or deny a petition for refund.

Whose signature is required on the petition for refund?

The petition must bear the signature of the party involved. If a petitioner is an individual, the individual must sign the form. If a petitioner is a partnership or limited liability partnership, a partner must sign the form. If a petitioner is a corporation, an officer of the corporation must sign the form. If a petitioner is a limited liability company, a member must sign the form. If a petitioner is a representative of the taxpayer, the Alabama Department of Revenue’s official Power of Attorney (POA) form is required.

What is the time limit for requesting a refund?

Generally a petition for refund shall be filed with the department or a credit allowed, within (i) three years from the date that the return was filed, or (ii) two years from the date of payment of the tax, whichever is later, or, if no return was timely filed, two years from the date of payment of the tax. See Section 40-2A-7, Code of Alabama 1975 for more information.

Taxes Administered by Sales & Use

The Sales & Use Tax Division administers, collects and enforces over 20 different taxes. The Sales & Use Tax Administration Section of our Division is charged with the responsibility of administering, collecting and enforcing those taxes as shown below. Learn more about Taxes Administered by Sales & Use

The following is a list of the taxes administered, collected and enforced by the Sales & Use Tax Administration Section:

  • Sales Tax
  • Sellers Use Tax
  • Simplified Sellers Use Tax
  • Casual Sales & Use Tax
  • Consumers Use Tax
  • Lodgings Tax
  • Rental or Leasing Tax
  • Contractor’s Gross Receipts Tax
  • Drycleaning Trust Fund Fee
  • Utility Gross Receipts Tax
  • Utility Service Use Tax
  • 2.2% Utility License Tax
  • Hydroelectric Kilowatt Hour Tax
  • Alabama Nursing Facilities Privilege Tax
  • Pharmaceutical Providers Tax
  • Mobile Telecommunications Service Tax
  • 9-1-1 Prepaid Wireless Service Charge
  • Hospital Assessment Fee

Sales Tax

Sales tax is a privilege tax imposed on the retail sale of tangible personal property sold in Alabama by businesses located in Alabama. The tax is collected by the seller from their customer and remitted directly to the state. All sales of tangible personal property are retail sales except those defined as wholesale sales. Learn more

Wholesale Sales

Wholesale sales are sales of tangible personal property to licensed retail merchants, jobbers, dealers, or other wholesalers for resale. It does not include sales to users or consumers that are not for resale. The seller must maintain the sales tax number or exemption number for these customers.

When is the sales tax due?

The sales tax is due monthly, with returns and remittances to be filed on or before the 20th day of the month for the previous month’s sales. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make sales during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you make sales during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.  A discount is allowed if the tax is paid before the 20th day of the month in which the tax is due. The sales tax discount consists of 5% on the first $100 of tax due, and 2% of all tax over $100 not to exceed $400.00.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. View the Due Dates Calendar

If the 20th falls on a weekend or holiday, when is the due date?

The return must be submitted on or before the next working day to be timely filed.

Is the seller allowed a discount for timely filing and paying the sales tax due?

Yes. A discount is allowed if the tax is paid before the 20th day of the month in which the tax is due. The sales tax discount consists of 5% on the first $100 of tax due, and 2% of all tax over $100. Please note, however, that the monthly discount may not exceed $400.00. However, non-state administered local taxes that may be filed through MAT/ONE SPOT may have a different discount rate and MAT has been programmed accordingly.

Is there a penalty imposed for not timely filing and paying the sales tax due?

Yes. Penalty and interest is due if the tax is paid after the 20th day of the month in which the tax is due. The Failure to Timely File Penalty is 10% of the tax required to be paid or $50.00, whichever is greater. The Failure to Timely Pay Penalty is 10% of the tax required to be paid. Interest is due at the current rate. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. View interest rates Learn more

Withdrawals

Withdrawals are items purchased at wholesale which are withdrawn for use. A withdrawal would include any items that are purchased tax free for resale, but are withdrawn from inventory and used by the owner/employees instead of being sold. Withdrawals are subject to tax and the cost of these items should be reported on the sales tax return. A withdrawal also includes the cost of items withdrawn from inventory and used by the seller and/or employees in making additions to real property.

What are the state sales tax rates?

See State Tax Rates

  • 1.5% of the net difference paid for farm machinery; this rate also applies to the gross receipts from sales of machines, parts, and attachments for machines used in manufacturing, processing, compounding, mining, and quarrying tangible personal property.
  • 2% of the net difference paid for new and used automotive vehicles, truck trailers, semi-trailers, and manufactured homes.
  • 3% of the retail sales price of food for human consumption sold through coin-operated vending machines.
  • 4% of the gross proceeds of sales of all tangible personal property, other than that listed previously and specifically exempted by law, and the gross receipts from places of entertainment or amusements.

Local Sales Tax

In addition to the State Sales Tax, local sales taxes are also due, and these rates vary. The State of Alabama administers over 200 different city and county sales taxes; however, we do not administer all county or city sales taxes. Therefore, be advised to contact all counties and municipalities in which you do business in order to determine if you should register with them to collect their local tax. The local tax is due monthly, with returns and remittances to be filed on or before the 20th day of the month for the previous month’s sales. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make sales during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you make sales during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year. The discount for local sales tax is the same as for State sales tax. However, non-state administered local taxes that may be filed through MAT/ONE SPOT may have a different discount rate and MAT has been programmed accordingly.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Search Local Tax Rates

What is ONE SPOT?

ONE SPOT provides a single point of filing for all state-administered local sales, use, rental and lodgings taxes, as well as, non-state administered sales, use and rental taxes.

Sellers Use Tax

Sellers use tax is imposed on the retail sale of tangible personal property sold in Alabama by businesses located outside of Alabama which have no inventory located in Alabama, but are making retail sales in Alabama via sales offices, agents, or by any significant recurring contact or “nexus” with Alabama. The tax is due monthly, with returns and remittances to be filed on or before the 20th of the month for the previous month’s sales. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make sales during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you make sales during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.  No discounts apply for timely filing. The tax rates due are the same rates as for State sales tax. There may also be city and/or county sellers use tax due; these rates vary. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Learn more

Local Sellers Use Tax

The local sellers use tax is due monthly, with returns and remittances to be filed on or before the 20th day of the month for the previous month’s sales. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make sales during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you make sales during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.   No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Search Local Tax Rates

What is the Simplified Sellers Use Tax Program?

Legislative Act 2015-448, entitled the “Simplified Seller Use Tax Remittance Act,” allows eligible sellers to participate in a program to collect, report and remit a flat eight percent (8%) sellers use tax on all sales made into Alabama. An eligible seller is one that sells tangible personal property or a service into the State of Alabama from an inventory or location outside the state but does not have a physical presence in the State of Alabama and who is not otherwise required by Sections 41-4-116 or 40-23-190, Code of Alabama 1975 to collect tax on sales made into the state. Learn more about this program.

Consumers Use Tax

The consumers use tax is imposed on tangible personal property brought into Alabama for storage, use, or consumption in the state when the seller did not collect seller’s use tax on the sale of the property. The tax rates due are the same rates as for sales tax. The tax is due monthly, with returns and remittances to be filed on or before the 20th day of the month following the month in which the purchase was made. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you have purchases subject to consumer’s use tax during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you have purchases subject to consumer’s use tax during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.  No discounts apply for timely filing. The tax rates due are the same rates as for State sales tax. There may also be city and/or county consumers use tax due; these rates vary. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Learn more

Local Consumers Use Tax

Many cities and counties have use tax requirements patterned after the State law. Purchases from in-state vendors located outside these cities and counties for use within could be subject to their use tax. These rates vary. If a local city or county sales/use tax is paid under a requirement of law, no other additional local tax is due for the subsequent use in another city or county. The local consumers use tax is due monthly, with returns and remittances to be filed on or before the 20th day of the month following the month in which the purchase was made. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you have purchases subject to consumer’s use tax during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you have purchases subject to consumer’s use tax during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.   No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Search Local Tax Rates

Casual Sales and Use Tax

Casual sales and use tax is a sales tax upon every person, firm, or corporation purchasing within this state, other than at wholesale, any automotive vehicle, motorboat, truck trailer, trailer, semitrailer, or travel trailer required to be registered or licensed by a county licensing official in this state from any person, firm, or corporation that is not a licensed dealer in engaged in selling such vehicles.

Casual sales and use tax is collected by local licensing officials. The authority for collecting the casual sales tax is found in Section 40-23-100 through 40-23-111, Code of Alabama 1975.

The casual sales and use tax is due monthly, with returns and remittances to be filed on or before the 20th day of the month for the previous month’s sales. The licensing official is entitled to a collection fee of five percent of all revenue collected when the collections are remitted to the Department of Revenue within the time allowed by law. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid.

The casual sales and use tax may be filed and paid electronically through the My Alabama Taxes (MAT) filing system at https://myalabamataxes.alabama.gov/_/.  However, licensing officials have the option of sending a paper return and check.

Rental Tax

Rental tax is a privilege tax levied on the lessor for the leasing or renting of tangible personal property. The gross receipts, including any rental tax invoiced, from the leasing or rental of tangible personal property are subject to the State rental tax at the following rates:

  • Automotive vehicles:  1.5%
  • Linens/Garments:  2.0%
  • Other:  4.0%

This tax is due on “true leases” (those leases in which the title to the property is retained by the lessor at the end of the lease agreement or when the lessee has an option to purchase the item at the end of the lease agreement for the fair market value of the item). “Conditional sales leases” (those in which the title of the property is transferred to the lessee at the end of the lease agreement or when the lessee has an option to purchase the item at the end of the lease agreement for $1 or a nominal amount with no option to return the leased item without purchasing) are subject to sales tax. When equipment is under the control of and operated by employee of lessor, then the transaction is considered a service rendered and is not subject to rental tax. Rental tax returns and remittances are due monthly on or before the 20th day of the month for the previous month’s rentals. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make rentals during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you make rentals during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.  No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Learn more

Local Rental Tax

Local rental tax is levied in the same manner as the State rental tax; these rates vary. Local rental tax is due monthly with returns and remittances to be filed on or before the 20th day of the month for the previous month’s rentals. However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you make rentals during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you make rentals during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.   No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Search Local Tax Rates

Lodgings Tax

The lodgings tax is a privilege tax on persons, firms, and corporations engaged in renting or furnishing rooms, lodgings, or other accommodations to transients for periods of less than 180 days of continuous occupation and applies to all charges for providing such accommodations. This tax also applies to charges for personal property used or furnished in such rooms or lodgings. Some examples of entities subject to this tax are those entities engaged in the operation of: hotels, motels, lodges, inns, tourist courts, tourist homes, camps, trailer courts, or any other place where rooms, apartments, cabins, sleeping accommodations, house trailer parking accommodations or other accommodations are made available to travelers, tourists, or other transients. A discount is allowed if the tax is paid before the 20th day of the month in which the tax is due. The lodgings tax discount consists of 5% on the first $100 of tax due, and 2% of all tax over $100. The tax is due monthly with returns and remittances to be filed on or before the 20th day of the month for the previous month’s lodgings.  However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you provide accommodations during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you provide accommodations during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Learn more

Lodgings Tax Rate

The state lodgings tax rate is 5% of the charges for accommodations in counties of the geographic region comprising the Alabama Mountain Lakes area (those being Blount, Cherokee, Colbert, Cullman, DeKalb, Etowah, Franklin, Jackson, Lauderdale, Lawrence, Limestone, Madison, Marion, Marshall, Morgan and Winston counties). In all other Alabama counties, the state lodgings tax rate is 4% of the charges for accommodations.

How do I report lodging tax if the lodging transactions were made through a third party platform/facilitator?

If the third party platform/facilitator remits all the state and local lodging taxes for the transactions made through the platform/facilitator,  you do not need a state lodging account or a local lodgings account.

If you will be making lodging transactions yourself and also using a third party platform/facilitator, you must obtain a state and local lodging tax account to file and pay taxes on the lodging transactions you made. NOTE:  You should report any third party/facilitator transactions on the state and local lodging tax return and then deduct those transactions to arrive at the net taxable gross proceeds.

make all my lodging transaction bookings through a third party platform/facilitator, can the department provide me with a listing of all my transactions?

No. Third party platforms/facilitators do not provide a listing of how much lodging taxes is applied to any individual or specific lodging addresses.

Are there any lodging transactions that are not subject to lodging taxes?

Section 40-26-1 provides the following exemptions from lodging taxes as listed below:

  • The tax shall not apply to rooms, lodgings, or accommodations supplied: (i) For a period of 180 continuous days or more in any place; (ii) by camps, conference centers, or similar facilities operated by nonprofit organizations primarily for the benefit of, and in connection with, recreational or educational programs for children, students, or members or guests of other nonprofit organizations during any calendar year; or (iii) by privately operated camps, conference centers, or similar facilities that provide lodging and recreational or educational programs exclusively for the benefit of children, students, or members or guests of nonprofit organizations during any calendar year.
  • For purposes of subsection (b): “Children” means individuals under age 21; “student” is defined in accordance with 26 U.S.C. §151(c)(4), as in effect from time to time or by any successor law; “nonprofit organization” is an organization exempt from federal income tax under 26 U.S.C. §501(c)(3), as in effect from time to time or any successor law; and “privately operated” refers to any camp, conference center, or similar facility other than those operated by a nonprofit organization as herein defined.
  • For transactions entered into on or after October 1, 2019, the tax shall not apply to marine slips, places or spaces for tent camping, or places or spaces provided for motor homes, travel trailers, self-propelled campers or house cars, truck campers, or similar recreational vehicles commonly known as R.V. s, which are supplied for a period of 90 continuous days or more in any place.
  • Charges made for the rental of a ballroom, dining room, club room, sample room, conference room, wedding chapel, or similar room or space that is not intended nor suitable for overnight sleeping purposes and that is not used for overnight sleeping purposes is not subject to the tax levied pursuant to this chapter if the charges for the rental are separately stated by the facility and the room or space is used exclusively as a room or space for a meeting, conference, seminar, club meeting, private party, or similar activity.

Local Lodgings Tax

Local lodgings tax is levied in the same manner as the State lodgings tax; these rates vary. However, we do not administer all county or city lodgings taxes. Therefore, be advised to contact all counties and municipalities in which you do business in order to determine if you should register with them to collect their local tax. Local lodgings tax is due monthly with returns and remittances to be filed on or before the 20th day of the month for the previous month’s lodgings.  However, pursuant to Section 40-23-7, Code of Alabama 1975, you may request quarterly filing status if you have a tax liability of less than $2,400.00 for the preceding calendar year.  You may request bi-annual filing if you have a tax liability of less than $1,200 for the preceding calendar year.  You may also request bi-annual filing if you provide accommodations during no more than two thirty consecutive day periods during the preceding calendar year.  You may request annual filing status if the tax liability for the entire preceding calendar year is less than $600.00.  You may also request annual filing if you provide accommodations during no more than one thirty consecutive day period during the preceding calendar year.  Changes to the filing status can only be requested each year before February 20th in order to file quarterly, bi-annually or annually for that calendar year. The discount for local sales tax is the same as for State sales tax. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Search Local Tax Rates

What is Contractors Gross Receipts Tax?

Contractors Gross Receipts Tax is a privilege tax imposed on persons, firms, and corporations engaged in the business of contracting to construct, reconstruct, or build public highways, roads, bridges, streets, or tunnels for the state of Alabama. The contractors gross receipts tax rate is 5% and applies to all payments made to the contractor or contract assignee whether the payments are made pursuant to a contract, purchase order, supplemental agreement, change request or other arrangement to perform work. These contracts may include but are not limited to the following:

  • Earthwork
  • Bases
  • Surfacing
  • Pavements
  • Structures
  • Incidentals such as:
    • Traffic control devices
    • Highway lighting
    • Materials
    • Bridge scouring and painting
    • Installation or repair of overhead signs
    • Installation of structure footings
    • Sign rehabilitation

The contractors gross receipts tax does not apply to the following:

  • Contracts between the contractor and the federal government when the state of Alabama is not listed as a joint party.
  • Contracts between the contractor or contract assignee and the city, town, or county when the state of Alabama is not listed as a joint party.
  • Contracts to construct, reconstruct, or build rest areas or welcome stations.
  • Contracts that do not include or require the construction, reconstruction, or building of a public highway, road, bridge, street, or tunnel. (Example: mowing and/or landscaping, parking lots, fencing, etc.)

Additional payments, which may cause an increase in the contract price, due to escalations in the cost of fuel, material, and/or labor.

The tax is due monthly with returns and remittances to be filed on or before the 20th day of the month following the month in which the payment was received by the contractor or contract assignee. A discount is allowed if the tax is paid before the 20th day of the month in which the tax is due. The contractors gross receipts tax discount consists of 5% on the first $100 of tax due, and 2% of all tax over $100. The discount may not exceed $400.00 Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid.

Mobile Telecommunication Services Tax

The mobile telecommunication services tax is a privilege/license tax levied against every home service provider doing business in the State of Alabama on the account of furnishing mobile telecommunication services to a customer with a place of primary use in the State of Alabama by said home provider The authority for collecting the mobile telecommunication services tax is found in Section 40-21-120 through 40-21-126, Code of Alabama 1975.

Section 40-21-121 provided these services are mobile services that (i) are provided for profit, (ii) are an interconnected service, and (iii) are available to the public:

  • Cellular telecommunications service
  • Personal communications service
  • Specialized mobile radio service
  • Mobile service that is the functional equivalent of a commercial mobile radio service
  • One-way and two-way radio communications service
  • Paging/beeper services

The rate of tax for furnishing mobile telecommunication services is 6% of all gross sales or gross receipts.

The mobile telecommunication services tax is due monthly, with returns and remittances to be filed through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month for the previous month’s sales. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. The mobile telecommunication service provider is entitled to a collection fee in consideration of the costs incurred by the mobile telecommunication services provider in collecting and remitting the tax levied in Section 40-21-121 Code of Alabama 1975; the amount deducted and retained by such provider shall be one-fourth of one percent of the gross amount of such tax billed.

Is a mobile telecommunication services tax account subject to estimated taxes?

Yes. Section 40-21-123 provides that a taxpayer with an average monthly tax liability of $10,000 or more during the preceding calendar year shall pay, by the 20th of the month in which the liability occurs, an estimated amount not less than the actual tax liability for the same month during the preceding year. When a taxpayer meets the requirement, the taxpayer will be notified by mail.

Utility Gross Receipt Tax

Utility gross receipt tax is a privilege/license tax levied on every utility furnishing electricity, domestic water, natural gas, telephone or telegraph services in the State of Alabama. The authority for collecting the utility gross receipt tax is found in Section 40-21-80 through 40-21-88, Code of Alabama 1975.

The amount of the tax shall be determined by the application of rates against gross sales or gross receipts, of furnishing electricity, domestic water, or natural gas in the State of Alabama. The tax shall be computed monthly with respect to each person to whom such services are furnished, in accordance with the following table:

If the monthly gross sales or gross receipts respecting a person are: The tax is:
Not over $40,000 4 % of such gross sales or gross receipts
Over $40,000 but not over $60.000 $1,600 plus 3% of excess over $40,000
Over $60,000 $2,200 plus 2% of excess over $60,000

The rate of tax for furnishing telegraph or telephone services in the State of Alabama is 6%   on all gross sales or gross receipts.

The utility gross receipt tax is due monthly, with returns and remittances to be filed through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month for the previous month’s sales. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. The utility gross receipt provider is entitled to a collection fee in consideration of the costs incurred by the utility provider in collecting and remitting the tax levied by Section 40-21-82, Code of Alabama 1975; the amount deducted and retained by such provider shall be one-fourth of one percent of the gross amount of such tax billed.

Is a utility gross receipt tax account subject to estimated taxes?

Yes. Section 40-21-85, Code of Alabama 1975, provides that a taxpayer with an average monthly tax liability of $10,000 or more during the preceding calendar year shall pay, by the 20th of the month in which the liability occurs, an estimated amount not less than the actual tax liability for the same month during the preceding year. When a taxpayer meets the requirement, the taxpayer will be notified by mail.

Is the state of Alabama and Alabama counties and municipalities subject to the utility gross receipt tax?

Yes, the utility tax levied in Section 40-21-82, Code of Alabama 1975 shall apply to all utility services furnished for use by the State of Alabama, the counties and municipalities within the State of Alabama, and any other person or entity previously exempt from all taxation.

Is the federal government and its agencies subject to the utility gross receipt tax?

No, the utility gross receipt tax levied in Section 40-21-82 shall not apply to the Federal Government and its agencies.

Utility Service Use Tax

The utility service use tax is an excise tax levied on the storage, use, or other consumption of electricity, domestic water, natural gas, telegraph, and telephone services in the State of Alabama. The authority for collecting the utility service use tax is found in Section 40-21-100 through 40-21-107, Code of Alabama 1975.

The amount of the tax shall be determined by the application of rates against the sales price of such services in the State of Alabama. The tax shall be computed monthly with respect to each person to whom such services are furnished, in accordance with the following table:

If the total sales price of the utility services furnished by a utility and stored, used, or otherwise consumed by a person in one month: The tax with respect to the utility is:
Not over $40,0000 4 % of such gross sales or gross receipts
Over $40,000 but not over $60.000 $1,600 plus 3% of excess over $40,000
Over $60,000 $2,200 plus 2% of excess over $60,000

The rate of tax against the sales price of such telegraph services or telephone services in the State of Alabama is 6% on all gross sales or gross receipts.

The utility service use tax is due monthly, with returns and remittances to be filed through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month for the previous month’s sales. The utility service use tax provider is entitled to a collection fee in consideration of the costs incurred by the utility provider in collecting and remitting the tax levied by Section 40-21-102, Code of Alabama 1975; the amount deducted and retained by such provider shall be one-fourth of one percent of the gross amount of such tax billed. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. 

  2.2% UTILITY LICENSE TAX

The 2.2% utility license tax is a license tax levied on each person, firm, or corporation operating a public utility (hydroelectric, water, electric, gas, other public utility, or privately owned and operated wastewater facility). The tax rate is two and two tenths percent (2.2%) on each dollar of gross receipts of such public utility in this state for the preceding year. The authority for collecting the 2.2% utility license tax is found in Section 40-21-50 through 40-21-64, Code of Alabama 1975.

The 2.2% utility license tax is to be paid quarterly through the My Alabama Taxes (MAT) filing system: one fourth on October 1, one fourth on January 1, one fourth on April 1 and one fourth on July 1 and shall become delinquent on the fifteenth day of each said month, based upon gross receipts for the preceding year, or half year if operations began after April 1. No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid

HYDROELECTRIC KILOWATT HOUR TAX

The hydroelectric kilowatt hour tax is a license/privilege tax upon each person, firm, corporation, agent or officer engaged in the business of manufacturing and selling hydroelectric power in the State of Alabama. The authority for collecting the hydroelectric kilowatt hour tax is found in Section 40-21-50 through 40-21-64, Code of Alabama 1975.

The rate of tax is two fifths of a mill upon each kilowatt hour of hydroelectric power manufactured and sold during the preceding calendar year.

The hydroelectric kilowatt hour tax is to be filed and paid through the My Alabama Taxes (MAT) filing system on or before September 25th of each year. No discounts apply for timely filing.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid

 911 Prepaid Wireless Service Charge

The 911 prepaid wireless service charge is a tax levied on the retail sales of prepaid wireless telephone services. All seller making retail sales of prepaid wireless telephone services, to include, but not limited to, the sale of prepaid wireless minutes via phone, card, download, code, or any other manner of transaction, shall collect the 911 prepaid wireless service charge from consumers and pay the amount collected to the Department of Revenue.  The authority for collecting the 911 prepaid wireless service charge is found in Section 11-98-5.3, Code of Alabama 1975.

Effective January 1, 2019, the rate of the 911 prepaid wireless charge is $1.86 per retail transaction.

The 911 prepaid wireless service charge is due monthly, with returns and remittances to be filed through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month for the previous month’s sales. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. Section 11-98-5.3, Code of Alabama 1975, provides that the 911 prepaid wireless service provider is permitted to retain a collection fee of four percent (4%) of the 911 prepaid wireless service charges collected by the seller from the prepaid wireless consumers.

Drycleaning Trust Fund Fee

The Drycleaning Trust Fund Fee is a self-insurance program which benefit the drycleaning industry to cover the costs of investigating, assessing, and remediating dry cleaning contamination. This program is jointly administered by the Alabama Department of Environmental Management (“ADEM”) and the Alabama Drycleaning Environmental Response Trust Fund Board (“the Board”). The fee is against each owner or operator of a drycleaning facility located in the State of Alabama who voluntarily notifies the program administrators that it elects to contribute to the Alabama Drycleaning Environmental Response Trust Fund. The authority for collecting the drycleaning trust fund fee is found in Section 22-30D-1 through 22-30D-12, Code of Alabama 1975.

The applicable fees are as follows:

  • Owner/Operator of an Existing Drycleaning Facility Electing to be Covered (22-30D-6(a)) – 2% of the gross receipts earned in Alabama during the prior calendar year, not to exceed $25,000 per year.
  • New Owner/Operator Acquiring an Existing Drycleaning Facility after 5/24/00 Electing to be Covered (22-30D-6(b)) – 2% of the gross receipts earned in Alabama by the prior owner/operator during the prior calendar year less the amount paid by prior owner/operator, not to exceed $25,000.
  • New Owner/Operator Establishing a New Drycleaning Facility after 5/24/00 Electing to be Covered (22-30D-6(c)) – One-time registration fee of $5,000 for the first year of operation; for the second year of operation, the greater of $5,000 or 2% of the gross receipts earned for prior calendar year, not to exceed $25,000. For each year thereafter, see “Owner/Operator of an Existing Drycleaning Facility” above.
  • Wholesale Distributors of Drycleaning Agents (22-30D-6(d)) – $5,000 per year
  • Owner of Abandoned Drycleaning Facility or Impacted Third Party (22-30D-6(m)) $5,000 per year per site

The registration fee shall be paid quarterly by each owner or operator to the Department of Revenue through the My Alabama Taxes (MAT) filing system: one-fourth (1/4) on April 1, one-fourth (1/4) on July 1, one-fourth (1/4) on October 1, and one-fourth (1/4) on January 1, and shall become delinquent on the 20th day of each said month. The registration fee shall be paid annually by each wholesale distributor to the Department of Revenue on April 1 and shall become delinquent on the 20th day of April. No discounts apply for timely payment. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. 

 Alabama Nursing Facilities Privilege Assessment

Alabama nursing facilities privilege assessment is an assessment on the business activities of every nursing facility in the State of Alabama. The privilege assessment imposed is in addition to all other taxes and assessments; and shall apply to each bed in the nursing facility. The current total nursing facilities assessment includes a privilege assessment, a supplemental privilege assessment, a monthly surcharge and a second supplemental privilege assessment. The authority for collecting the Alabama nursing facilities privilege assessment is found in Section 40-21-50 through 40-21-64, Code of Alabama 1975.

The total annual assessment rate for each bed in the facility is $4,756.80 or $396.40 per month per bed.

The returns and remittances are to be filed and paid monthly through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month following the month during which the tax is accrued. No discounts apply for timely filing. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid. 

Pharmaceutical Provider Tax

The pharmaceutical provider tax is a privilege tax on every provider of pharmaceutical services to citizens of Alabama. This tax may not be passed on to the consumer. The authority for collecting the pharmaceutical provider tax is found in Section 40-26B-1 through 40-26B-9, Code of Alabama 1975.

The tax is levied at the rate of ten cents (10¢) per prescription filled or refilled for a citizen of Alabama.

The returns and remittances are to be filed and paid monthly through the My Alabama Taxes (MAT) filing system on or before the 20th day of the month following the month during which the tax is accrued. No discounts apply for timely filing.  Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid.

Hospital Assessment Fee

Hospital Assessment Fee is an assessment imposed on each privately-operated hospital in the State of Alabama. Privately operated hospitals in the state of Alabama that are funded through the Alabama Medicaid program are taxed according to their net patient revenue. The assessment is a cost of doing business as a privately-operated hospital in the State of Alabama.

A private hospital in Alabama is a hospital other than:

  • Any hospital that is owned and operated by the federal government;
  • Any state-owned hospital;
  • Any publicly owned hospital;
  • A hospital that limits services to patients primarily to rehabilitation services; or
  • A hospital granted a certificate of need as a long- term acute care hospital.

The authority for collecting the hospital assessment fee is provided in Section 40-26B-70 through 40-26B-88, Code of Alabama 1975.

The rate is 6.0 % of the hospital’s net patient revenue. Assessment amounts are to be paid in equal quarterly installments by the fifteenth business day of each quarter. Note: If paying via EFT, the EFT payment information must be transmitted by 4:00 p.m. (Central Standard Time) on or before the due date, to be considered timely paid.

Assessments

I received a Preliminary Assessment, however, I am unable to pay the amount shown due. Can I set up installment payments?

The Assessment Unit is not authorized to arrange installment payments for taxes assessed either through a preliminary or final assessment. However, Code Section 40-2A-4(b)(6) does authorize installment payments under certain conditions if a Final Assessment of the tax has been entered. Therefore, if you received a Preliminary Assessment and do not have the money to pay the liability, you may contact the Assessment Unit (334-242-1340) and we will proceed with entry of a Final Assessment and transfer the file to the Collections Division within 45 days of the date of entry of the Final Assessment.

I received an assessment from the department for taxes owed by my predecessor. Is this right? Do I owe these taxes since they accrued previous to my takeover of the business?

Unfortunately for you this is correct. Code Sections 40-23-25 and 40-23-82, known as the successor provisions of the Code, provide guidelines for the sale/purchase of an on-going business. For example, a purchaser of an on-going business is required to withhold sufficient funds to cover any unpaid sales and use taxes, provided the seller does not have a certificate of good standing from the Department which shows taxes have been paid or taxes are due.

I received a Notice of Final Assessment from the Department of Revenue. What does this mean?

If you received a Final Assessment, you either:

  • filed tax returns without the payment of the tax liability
  • you previously received a Notice of Preliminary Assessment and did not respond or timely respond
  • you were audited by the Department and a tax liability was established for which you signed a consent form for entry of a Final Assessment
  • a conference was held before the Assessment Officer and the liability was upheld by the Department

The Department has sufficient reason to believe that you owe to the State and the assessment was entered to toll the statute of limitations. Learn More about the Assessment Process. You must enter a Notice of Appeal with the Alabama Tax Tribunal within 30 days from the date of mailing or delivery by personal service, whichever occurs earlier, if you wish to contest the assessment. (Code Section 40-2A-7(b)(5)) Accompanying the Notice of Final Assessment is a copy of the taxpayer’s rights to appeal the assessment to the Alabama Tax Tribunal or the appropriate Circuit Court. (Code Section 40-2A-4(a)(3))

Is a surety bond required when I receive a Final Assessment?

No. A surety bond is not required at the time you receive the Final Assessment.  However, if a sales tax balance remains due at the time the Final Assessment is no longer subject to appeal, you will be deemed non-compliant and be required to purchase and maintain a one-time surety bond for a two-year period.  Pursuant to Section 40-23-6(c) (1), Code of Alabama 1975, as amended, the surety bond shall be in the amount of the actual sales tax liability for the three months immediately preceding the non-compliant period, but not less than twenty-five thousand dollars ($25,000).  The Sales Tax Surety Bond (S&U:BOND) and Instructions for Executing the Sales Tax Surety Bond (S&U:BOND Inst) may be found on the Department of Revenue website at:   https://revenue.alabama.gov/forms.

I received a Final Assessment that I feel is incorrect. What should I do to resolve this matter?

You should file a Notice of Appeal with the Alabama Tax Tribunal or, in the case of appeals to the circuit court, you must file an appeal with the secretary of the department and the clerk of the circuit court in which the appeal is filed. On appeal to the circuit court or the Alabama Tax Tribunal, the Final Assessment shall be prima facie correct, and the burden of proof shall be on the taxpayer to prove the assessment is incorrect. (Section 40-2A-7(b)(5)(a)(b)(c) and (d))

The Department of Revenue recently sent a Notice of Final Assessment to my client who is in bankruptcy. Why? Is this not a violation of the U.S. Bankruptcy Code?

An assessment (either preliminary or final) which is entered by the Department against a bankrupt taxpayer is entered in order to establish the amount of a bankrupt claim with the Bankruptcy Court and it is a notification to the taxpayer of the amount of taxes owed to the state. If the taxpayer feels that the amount assessed is incorrect, the taxpayer should contact the Assessment Unit (334-242-1340) and explain their contentions and also provide any records which will substantiate their claim that the assessment is incorrect. Bear in mind that all jurisdictional time limitations for appeals must be adhered to. No. The entry of an assessment against a bankrupt taxpayer is not a violation of the Automatic Stay provisions of the U.S. Bankruptcy Code. (See U.S.C. Title 11 Section 362(9)(d).) This section provides for the making of an assessment of tax against a bankrupt taxpayer by a governmental unit. Assessments may be entered but the governmental unit cannot act to obtain possession of property of the bankruptcy estate. (See U.S.C. Title 11 Section 541 for definition of “property of the estate.”)

How did the Department of Revenue calculate the interest on the Notice of Preliminary Assessment and Notice of Final Assessment?

Interest is added to any tax or other amount due the Department which is not paid by the due date. Interest on any delinquency shall be charged from the due date of the tax. The interest is computed based on the underpayment rate established by the Secretary of the Treasury under the authority of 26 USC 6621. (Code Section 40-1-44(a))

What is a lien?

A lien is a claim that is usually recorded, against a piece of property or against an owner, in order to satisfy a debt or other obligation. The purpose of the lien is to enable the lienholder or creditor to institute an action to foreclose his lien. This means that the property can be sold by the creditor. The proceeds of the sale will be used to satisfy the debt. The proceeds of the sale, after the debt is satisfied, is paid to the former owner. In the case of a tax lien, the lien is recorded in the county in which the property is located.

What is the duration of a sales and use tax lien?

Once the lien has arisen, it will continue until the liability for the amount assessed is satisfied, released or becomes unenforceable by reason of lapse of time (i.e. 10 years from the date the lien is filed). (Code Sections 40-1-2, 40-29-20, and 49-29-21)

My client has received a Notice from the Department of Revenue that a lien has been entered in the county probate office real property records. What does this mean?

By filing a Notice of Tax Lien, the Department is notifying the public that the state has a claim against your client’s property, including property that may be acquired after the date the lien is filed. A lien may harm your client’s credit rating. A lien was recorded because your client had neglected or refused to pay taxes owed to the Department of Revenue. (See Code Sections 40-1-2 and 40-29-20.)

When will the Department of Revenue terminate a tax lien?

The Department may, at any time, release all or any portion of the property subject to the lien from the lien or subordinate the lien to other liens if it determines that the taxes are sufficiently secured by a lien on other property of the taxpayer or that the release or subordination of the lien will not endanger or jeopardize the collection of such taxes. A certificate by the Department to the effect that any property has been released from the lien or that such lien has been subordinated to other liens is conclusive evidence that the property has been released or that the lien has been subordinated as provided in the certificate. If any lien imposed by Sections 40-1-2 and 40-29-20 has been satisfied and a Notice of the Lien had been recorded by the Department pursuant to Section 40-1-2(c), the Department shall issue a release of the lien (40-1-2(d)) to the person against whom the lien was claimed. The Department shall record the lien release in any county where the original lien was recorded and in the office of the Secretary of State if applicable.

When is a tax lien effective against other creditors?

A tax lien is effective against other creditors after a Notice thereof has been filed by the Department of Revenue or other agency of the state or county in the office of the Judge of Probate of the county in which such property, real or personal, is located. (Section 40-1-2(b))

Is Alabama sales tax owed to the Department of Revenue dischargeable in bankruptcy?

In Peiffer v. Alabama Department of Revenue, 126 Bankr. 364 (1991), the Bankruptcy Court held that the Alabama sales tax constitutes a “trust fund” tax and as such is not dischargeable in bankruptcy pursuant to 11 U.S.C. Section 507(a)(7)(c). A “trust fund” tax is a tax which is levied directly on the consumer and required to be collected by the merchant and reported to the state.

Learn More about Assessment Procedures

Exemptions

What are “tax-exempt” entities?

Tax-exempt entities include those organizations or charities which are specifically exempted from Alabama sales and use taxes as well as the federal government, the State of Alabama, the counties of the State of Alabama, and the incorporated municipalities of the

State of Alabama, and the agencies, departments and instrumentalities of such governments.

Are all non-profit entities exempt from sales and use taxes?

No, the non-profit entity must be specifically listed in the law as being exempt from sales and use taxes. Many charities and nonprofit organizations with a statutory exemption are listed in Title 40 Chapter 9. The law is found at http://alisondb.legislature.state.al.us/alison/codeofalabama/1975/coatoc.htm

Are any churches eligible for a certificate of exemption?

No, churches are not statutorily exempt from sales and use taxes.

How do I obtain a certificate of exemption?

You must complete the appropriate application found on the website at www.revenue.alabama.gov. The applicable form will be ST: EX-A1 (For Wholesalers, Manufacturers, and Other Product Based Exemptions) or ST: EX-A1-SE (For Statutorily Exempt Entities). Follow the instructions on the application and send the application to the appropriate office. Form ST: EX-A1 must be mailed to the appropriate Taxpayer Service Center listed in the instructions.  Form ST: EX: A1-SE must be emailed to stexemptionunit@revenue.alabama.gov or sent by U.S Postal mail to Sales and Use Tax Division, Exemption Unit, P. O. Box  327710, Montgomery, AL 36132-7710.

Do I need a social security number or a federal identification number to apply for a certification of exemption?

Yes. A taxpayer applying for a certificate of exemption as a sole-proprietorship must provide a valid social security number with a picture identification. An entity applying as a corporation or LLC must provide a copy of their IRS issued letter verifying their federal identification number.

How long is the certificate of exemption valid?

The certificate of exemption shall be valid for one year from the date of issuance and shall be renewed annually each subsequent year before the end of the month in which the certificate expires. Any person or company that fails to obtain or renew a certificate of exemption prior to its expiration may not make tax exempt purchases or rent tax exempt accommodations after the expiration.

How can I renew my certificate of exemption?

You may submit a new application or if you have an application on file with the department that is less than three years old and the information is still current, you may send an email request to stexemptionunit@revenue.alabama.gov to renew the certificate of exemption.

Is there a filing requirement associated with the certificate of exemption?

Yes. All persons or companies, other than governmental entities as defined in Section 40-9-60, exempt from the payment of Alabama sales, use, and lodgings tax, regardless of the type of transaction or whether the tangible personal property is subject to sales and use tax, or whether the accommodations are subject to lodgings tax, may be required to file an information report in a manner as prescribed by the Department of Revenue.  Such required informational reports shall be a prerequisite for the renewal of certificates of exemption.

Can a certificate of exemption be issued to a farmer?

No, the department does not issue certificate of exemptions to farmers.  However, there is an exemption form for certain agricultural purposes found in Section 40-23-4.3.  A taxpayer may print the form and fill it out; and give it to the vendor. Most farming products are not exempt from sales and use taxes but are taxed at the lower farming rate.

 

Government Contractor’s Certificate of Exemptions:

Who is a contractor?

For general sales and use tax purposes, a contractor is any person, firm or corporation who contracts to make additions, alterations, or improvements to real property. Contractors are deemed not to be reselling building materials which they purchase and affix to realty, but rather to be using or consuming such materials in performing their contracts. A contractor who buys building materials and supplies for use or “consumption” in completing the construction, repair, or alteration to real property must pay sales tax to the Alabama vendor at the point of sale on materials so used or consumed or pay use tax directly to the Revenue Department on purchases of materials from out-of-state vendors who do not collect the tax.

What are building materials?

Building materials include such tangible personal property as lumber, timber, nails, screws, bolts, structural steel, reinforcing steel, cement, lime, sand, gravel, slag, stone, telephone poles, fencing, wire, electric cable, brick, tile, glass, plumbing supplies, plumbing fixtures, pipe, pipe fittings, electrical fixtures, built-in cabinets, sheet metal, paint, roofing materials, road-building materials, sprinkler systems, built-in fans, heating systems, flooring, carpet, floor furnaces, crane ways, crossties, railroad rails, railroad track accessories, tanks, builders hardware, doors, door frames, windows, window frames, water meters, gas meters, well pumps and any and all other tangible personal property which becomes a part of real property.

What is the contractor’s certificate of exemption?

For certain purchases by contractors working on qualifying government entity projects, per Act 2013-205 and Alabama Department Rule 810-6-3-.77, there is an additional option to purchase the materials for that project tax exempt by obtaining a Certificate of Exemption for Government Entity Projects. This Certificate applies to the purchase of building materials, construction materials and supplies, and other tangible personal property that become part of the structure.

What government entity projects qualify for the contractor’s certificate of exemption?

Qualifying projects and contracts are those generally entered into with the following governmental entities: The State of Alabama, a county or incorporated municipality of Alabama, an Alabama public school, an Alabama industrial or economic development board or authority, and any Alabama public water and sewer authority, district, or board that is otherwise sales and use tax exempt. Please note that contracts entered into with the federal government and contracts pertaining to highway, road, or bridge construction or repair do not qualify for the exemption provided for in Act 2013-205 or Act 2018-234.

How do I obtain a contractor’s certificate of exemption?

You must complete the appropriate application.  The application, Form ST: EXC-01 is found on the department’s website at www.revenue.alabama.gov.   Form ST: EXC-01 may be  emailed to stexemptionunit@revenue.alabama.gov or sent by U.S Postal mail to Sales and Use Tax Division, Exemption Unit, P. O. Box  327710, Montgomery, AL 36132-7710.

What documentation is required to obtain a contractor’s certificate of exemption?

Exempt Entity:

    1. Signed Form ST: EXC-01 Application
    2. Copy of executed/Signed Contract, letter of intent, notice of Award, and/or notice to proceed

General Contractor:

    1. Signed Form ST: EXC-01 Application
    2. Copy of executed/Signed Contract, letter of intent, notice of Award, and/or notice to proceed
    3. list of Subcontractors
    4. Alabama board of General Contractor’s license
    5. State/County business license (usually obtained through county probate office)
    6. Any other municipal business licenses associated with the project

Subcontractor:

    1. Signed Form ST: EXC-01 Application
    2. Alabama board of General Contractor’s license
    3. State/County business license (usually obtained through county probate office)
    4. Any other municipal business licenses associated with the project
    5. list of Subcontractors (if any)

The exempt entity certificate of exemption must be issued prior to the issuance of the general contractor’s certificate of exemption. The general contractor’s certificate of exemption must be issued prior to the issuance of the subcontractor’s certificate of exemption.

How long is the contractor’s certificate of exemption valid?

The contractor’s certificates of exemption shall be valid for the specified timeframe listed on the certificate of exemption.

It is possible for the contractor’s certificate of exemption to be back-dated?

No. The certificate of exemption will be issued as of the project start date or the received date of the application. If, upon receipt of the application, the project has already commenced, the certificate will be issued as of the received date of the application. Any purchases made prior to the issuance of a certificate will not be exempt.

Is there a filing requirement associated with the contractor’s certificate of exemption?

Yes.  Contractors and subcontractors who successfully apply for this exemption will be required to file monthly consumers use tax returns which include a total of all exempt purchases for ongoing projects. If there are no purchases made using the exemption certificate, then a “zero” return must still be filed in the reporting table for the period. There is a requirement of one entry for each active contractor’s certificate of exemption for each filing period. The consumer use return is filed through the My Alabama Taxes (MAT) filing system. Failure to comply with the filing requirement will result in the cancellation of your contractor’s certificate of exemption.

My contactor’s certificate of exemption has expired but the work on the project is still ongoing, how do I request an extension?

If an extension is needed for a project, please send an email to STExemptionUnit@revenue.alabama.gov. Be sure to include the certificate number (EXM-R#########) and the desired ending date.  Extension requests should be submitted no more than 30 days after the expiration date. The general contractor must request and obtain an extension before the subcontractor can obtain an extension.

The general contractor did not extend their contactor’s certificate of exemption, will I be able to extend my certificate? How will I be affected?

No, a subcontractor’s certificate of exemption’s “ending date” cannot be extended beyond the general contractor’s certificate of exemption’s “ending date.”  If the general contractor does not extend their certificate, then any purchases the subcontractor makes after the “ending date” is subject to sales or use tax.

We are a subcontractor working under a general contractor, is a license required from the State of Alabama Licensing Board for General Contractor’s?

If your contract amount on the project is over $50,000, you are required to obtain a General Contractor’s License. Please visit the website https://genconbd.alabama.gov/Law.aspx for more information.

What is required on the State of Alabama Business License in order to obtain the contractor’s certificate of exemption?

In order to be approved for a Contractor’s Certificate of Exemption for a Government Entity Project, you will need to obtain a State Business License for Contractors. The designation on the State Business License is Schedule/Section 84 – Contractors. The cost of the license is based upon the amount of gross contract funds that you may receive.

I am a general/prime contractor working on an approved government entity project, can my subcontractors use my contractor’s certificate of exemption?

Certificates are not transferable and may only be used by the person, firm, or corporation whose name appears on the certificate.  Each contractor or a subcontractor must apply for their own certificates of exemption.

What is a Purchasing Agent Appointment?

The United States Government, the State of Alabama, counties and incorporated municipalities of the state, and various other entities within the state are specifically exempt from paying state and local sales and use tax on their purchases of tangible personal property. These tax-exempt entities cannot transfer their exempt status to a contractor or developer who is required to purchase and pay for the materials that are to be used pursuant to a construction contract with the tax-exempt entity. However, a tax-exempt entity may appoint as its agent a contractor to act on its behalf to order materials or to order and pay for materials that will be incorporated into real estate pursuant to a construction contract with the tax-exempt entity. Purchases made by the agent on behalf of the tax-exempt entity will be exempt from the payment of state and local sales or use tax provided that the procedures outlined in Alabama Department of Revenue Rule 810-6-3-.69.02 are followed.

Other Information

Does the Department have brochures or pamphlets to provide more information on specific tax topics?

Yes, see the list of informational brochures and pamphlets provided below:

What is the latest FEDERAL CREDIT CARD PROGRAM GSA SmartPay® 3 Information?

As of November 30, 2018, the federal government updated its credit card program.  The General Services Administration (GSA) has entered into contracts with Citibank and US Bank under the program named GSA SmartPay® 3.  (www.gsa.gov/gsasmartpay)  The following information is provided to assist Alabama vendors in determining whether or not tax applies to transactions paid by GSA SmartPay® 3 cards.

The GSA SmartPay® 3 program provides four business lines (card types):  Purchase, Travel, Fleet, and Integrated (includes fleet, travel and/or purchase functionality and offers a single card for all purchases.)  These cards/accounts can be Centrally Billed Accounts (CBAs) or Individually Billed Accounts (IBAs).

Centrally Billed Accounts (CBAs) are charge card accounts in which all charges are billed directly to the federal government and paid directly by the federal government to the issuing bank.  (Sales tax is not due on credit card purchases which are centrally billed to and paid by the federal government.  Lodgings tax is not due on charges for lodgings which are centrally billed to and paid by the federal government.)

Individually Billed Accounts (IBAs) are charge card accounts in which charges are paid directly by the cardholder/federal employee to the issuing bank; the federal employee is then reimbursed by the government.  (Sales tax and lodgings tax are due on credit card transactions where the purchases or charges for lodgings are billed to and paid by federal employees, who are then reimbursed by the federal government.)

  • Purchase Cards are for purchasing general supplies and services.  All federal government GSA SmartPay® 3 Purchase cards are centrally billed.  Therefore, transactions paid for with this card are tax-exempt.
  • Fleet Cards are for purchasing fuel and supplies for government vehicles.  All federal government GSA SmartPay® 3 Fleet cards are centrally billed. Purchases of tangible personal property paid for with this card are exempt from sales taxes. However, purchases of fuel paid for by this card are not exempt from state fuel excise taxes.
  • Travel Cards are for paying travel expenses related to official government travel (airline, hotel, meals, incidentals).  Federal government GSA SmartPay® 3 Travel cards may be centrally billed or individually billed.  The Travel card uses the 6th digit of the account number to identify whether the account is a Centrally Billed Account or an Individually Billed Account.  If the sixth digit is 1, 2, 3, or 4, the transactions against the Travel card are individually billed to the federal employee, and, therefore, the transactions are subject to applicable taxes.  See the chart below.
  • Integrated Cards – Two or more business lines (card types) whose processes are integrated into one card.
    • All Fleet and Purchase type transactions on a GSA SmartPay® 3 integrated card are centrally billed. Purchases of tangible personal property paid for with this card are exempt from sales taxes. However, purchases of fuel paid for by this card are not exempt from state fuel excise taxes.
    • Travel functionality on a GSA SmartPay® 3 integrated card may be centrally billed or individually billed.  The numbering structure for Integrated Cards to differentiate between centrally and/or individually billed transactions will be specific to each agency / organization using the integrated card.  This information will be provided on the GSA SmartPay® website (www.gsa.gov/gsasmartpay) as it becomes available.

Department of the Interior:  With the exception of the purchase of meals and incidental travel expenses which are individually billed and subject to sales tax, transactions paid for with the Department of the Interior’s integrated card are centrally billed and exempt from sales and lodgings tax. Purchases of fuel paid for by this card are not exempt from state fuel excise taxes.

The Department of the Interior GSA SmartPay® 3 charge cards can be identified by their unique prefixes and account numbers, government-designed artwork, and wording that indicates that the card is for official transactions for the U. S. Government.  The Department of the Interior Integrated Card account numbers begin with 5568 26.

Purchase
Travel
Fleet
     
Prefix (1st four digits)
4614 – Visa
4716 – Visa
5565 – MasterCard
5568 – MasterCard
4614 – Visa
4615 – Visa
4486 – Visa
5565 – MasterCard
5568 – MasterCard
4486 – Visa
5563 – MasterCard
5568 – MasterCard
6900 – WEX
7071 – WEX
7088 – Voyager
6th Digit
NA
0
CBA
1
IBA
2 – 4
IBA
5
Reserved
6 – 9
CBA
NA

 

How does the Internet Tax Freedom Act affect my business?

The Internet Tax Freedom Act Amendments Act of 2007 prohibits multiple and discriminatory taxes on electronic commerce including Internet access. This act, which became Public Law 110-108, amends the Internet Tax Freedom Act to: (1) extend the moratorium on state taxation of Internet access and electronic commerce and the exemption from such moratorium for states with previously enacted Internet tax laws preserving the grandfather provisions to protect revenues in those states and local governments that currently collect those taxes until November 1, 2011; (2) restrict the authority of certain states claiming an exemption from the moratorium under the Internet Tax Nondiscrimination Act of 2004 to impose Internet access taxes after November 1, 2011; (3) expand the definition of “Internet access” to include related communication services such as e-mails and instant messaging; (4) redefine “telecommunications” to include unregulated non-utility telecommunications such as cable service; and (5) allow a specific exception to the moratorium for certain state business taxes enacted between June 20, 2005, and November 1, 2007, that do not tax Internet access.

The Internet Tax Freedom Act of 1998 enacted a moratorium on the imposition of state and local taxes on Internet access. It was extended by the Internet Tax Nondiscrimination Act and this act, extends it again through November 1, 2014.

According to the new federal legislation, the definition of “Internet access” includes:

(a) a service that enables users to connect to the Internet to access content, information, or other services offered over the Internet;

(b) the purchase, use, or sale of telecommunications by a provider of a service described in(a) to the extent those telecommunications are purchased, used, or sold to provide that service or to otherwise enable users to access content, information or other services offered over the Internet;

(c) services that are incidental to the provision of the service described in (a) when furnished to users as part of that service, such as a home page, electronic mail and instant messaging (including voice and video capable electronic mail and instant messaging), video clips, and personal electronic storage capacity; and

(d) a home page, electronic mail and instant messaging (including voice and video capable electronic mail and instant messaging), video clips, and personal electronic storage capacity, that are provided independently or not packaged with Internet access.

Internet access does not include voice, audio or video programming, or other products and services described in (a), (b), (c), or (d) that utilize Internet protocol or any successor protocol and for which there is a charge that is either separately stated or aggregated with the charge for services in (a), (b), (c), or (d).

Sections 40-21-80 and 40-21-100, Code of Alabama 1975, exempt Internet access charges from utility gross receipts tax and the utility service use tax as enacted by Alabama Act 98-654 in 1998.

The new law amends the definition of Internet access to make clear that a product or service which is delivered by the Internet is not necessarily tax free. The new definition ensures that the state and local tax base is not eroded as more services are delivered by the Internet. When an Internet service provider bundles content, information and services that might otherwise be taxable with Internet access, the new language eliminates the interpretation that the entire bundle is tax exempt.

Section 40-21-82, Code of Alabama 1975, allows providers of telephone services to combine or bundle taxable and nontaxable services on one invoice and charge the customer tax on the taxable charges.

The legislation specifically prohibits taxation of e-mail and instant messaging services that are provided independently or not packaged with Internet access. Telecommunications services such as telephone services, cellular services, paging services and facsimile services that are not used to provide access to the Internet are subject to tax.

Section 40-21-82, Code of Alabama 1975, levies a privilege or license tax against every utility furnishing telegraph or telephone services in the State of Alabama. The amount of the tax is determined by the application of rates against gross sales or gross receipts from the furnishing of such services in the State of Alabama. Alabama code provides no exemption or exclusion for telephone services provided by the Internet.

Voice over Internet Protocol (VoIP) and any other form of telephony and similar services that utilize Internet protocol are excluded from the amended definition of Internet access and are not included in the federal moratorium. These types of telephony and telecommunications services continue to be subject to the Alabama Utility telecommunications services tax.