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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-.12 entitled “Taxes Required to be Filed Electronically” mandates electronic filing and lists the tax returns that are required to be filed electronically.Effective October 1, 2006, Act No. 2006-552 requires payments that are $750 or greater to be made electronically through an Electronic Funds Transfer (EFT) method. EFT ACH Debit is the preferred EFT payment method. 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 first Friday in August, 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 is FREE of charge. Rule 810-1-6-.12 mandates that the following taxes be filed electronically: State and Local Sales, Use, Lodging and Rental Taxes, and State Utility, Mobile Telecommunications, Contractors Gross Receipts, Nursing Facility, and Pharmaceutical taxes online. This includes forms 2100/2105/2110/2115/2120/2125/2620/2610/2410/2310/2320/9501/UPL-4/UPL-5/UPL-6/CTS-2/2810/2800/2510. 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 “Taxes Required to be Filed Electronically” mandates electronic filing and lists the tax returns that are required to be filed electronically.

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 MAT/ONE SPOT, your EFT ACH debit method payments are made in conjunction with filing your return. 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. 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 Self-Administered local return that was filed through My Alabama Taxes (MAT), you should contact the self-administered locality for instructions. View list of self-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).

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.

What kinds of taxes are administered by the sales & use tax division?
The Sales & Use Tax Division administers, collects and enforces over 38 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

Taxes Administered by Sales & Use

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, a taxpayer may elect to file and pay state sales tax on a calendar quarter basis when the total state sales tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state sales tax liability during the preceding calendar year is $10 or less, the taxpayer may file state sales tax on a calendar year basis. 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. 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, a taxpayer may elect to file and pay state-administered local sales tax quarterly when the total state sales tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the Department no later than February 20 of each year. Also, if a taxpayer’s total state sales tax liability during the preceding calendar year is $10 or less, the taxpayer may file local sales tax on a calendar year basis. 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 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. Effective October 2016, non-state administered local lodgings tax will be added to the tax types available to be filed in MAT/ONE SPOT.

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, a taxpayer may elect to file and pay state use tax quarterly when the total state use tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state use tax liability during the preceding calendar year is $10 or less, the taxpayer may file state use tax on a calendar year basis. 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, a taxpayer may elect to file and pay state-administered local use tax quarterly when the total state sales tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year and the total state use tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state sales tax liability during the preceding calendar year is $10 or less, the taxpayer may file local use tax on a calendar year basis. 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.

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, a taxpayer may elect to file and pay state use tax quarterly when the total state use tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state use tax liability during the preceding calendar year is $10 or less, the taxpayer may file state use tax on a calendar year basis. 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, a taxpayer may elect to file and pay state-administered local use tax quarterly when the total state sales tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year and the total state use tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state sales tax liability during the preceding calendar year is $10 or less, the taxpayer may file local use tax on a calendar year basis. 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

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, a taxpayer may elect to file and pay state rental tax quarterly when the total state rental tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state rental tax liability during the preceding calendar year is $10 or less, the taxpayer may file local rental tax on a calendar year basis. 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, a taxpayer may elect to file and pay state-administered local rental tax quarterly when the total state rental tax for which the taxpayer is liable averages less than $200 per month during the preceding calendar year. The election to file and pay quarterly shall be made in writing to the ADOR no later than February 20 of each year. Also, if a taxpayer’s total state rental tax liability during the preceding calendar year is less than $10, the taxpayer may elect to file state rental tax on a calendar year basis. 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.

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. 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. 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. 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.

Local Lodgings Tax
The applicable local lodgings tax rate should be charged in addition to the State lodgings tax; these rates vary. 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. The discount for local lodgings tax is the same as for the State lodgings 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.
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 register for a sales tax number if I only make wholesale sales?
No. 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 mailing address of my business?
If you are merely changing the mailing address, contact the ADOR at 334-242-1490 or e-mail the change.

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 Proceedures

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

Assessments

Learn More about Assessment Procedures
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))

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 aquired 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.

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 fieldand 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.

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.

Bulk Filing

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

Miscellaneous

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:

• Automotive Sales, Use & Lease Tax Guide
• Guidelines Regarding Agricultural Related Sales
• Contractors Gross Receipts Tax
• Pharmaceutical Providers Tax Pamphlet
• Sales to Tax Exempt Entities
• Tax Facts for Exempt Entities
• Sales Tax Brochure
• Taxpayer Bill of Rights
• Plain Talk About Your Tax Liability
• Starting a New Business
• How to Close a Business

 

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