The effect of the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. on June 21, 2018, is that an out-of-state seller with no physical presence in Alabama (i.e., remote seller) is required to collect and remit Alabama sellers use tax through the Simplified Sellers Use Tax (SSUT) program if total taxable sales into Alabama for the previous calendar year are above $250,000. Remote sellers with sales below this amount may also apply to participate in the SSUT program. Alternatively, this obligation may be satisfied by collecting and remitting under Alabama’s traditional state and local use tax regime.
A remote seller is an out-of-state seller that has no physical presence in Alabama.
All remote sellers selling over $250,000 in total sales delivered into Alabama the previous calendar year are required to collect and remit taxes on sales into Alabama beginning on October 1, 2018. New standards for administering simplified sellers use tax laws for remote sellers will be developed by rule, with a small seller exception for remote sellers who do not have annual sales of products and services into the state of more than $250,000. Any small seller exception adopted will not apply to sellers with a physical presence in Alabama. However, remote sellers with sales below the threshold may still apply to participate in the simplified sellers use tax program.
Alabama requires remote sellers to begin collecting and remitting on October 1, 2018. To ensure the remote seller’s registration is properly processed by October 1, 2018, the remote seller should complete the registration at least three weeks prior to October 1, 2018. The remote seller may indicate a first sales date of October 1, 2018 on the application. A remote seller may apply or register and begin collecting tax at any time prior to October 1, 2018, but the first date of collection should be consistent with the first sales date indicated on its application.
Remote sellers can apply for participation in the SSUT program, to begin collecting and remitting Alabama’s simplified sellers use tax, by completing the SSUT application which can be accessed through the following link: https://revenue.alabama.gov/wp-content/uploads/2017/07/SSUT-Application.pdf.
Remote sellers that were registered in Alabama prior to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., are not impacted by this decision and may continue to collect and remit sales and use tax or apply for participation in the SSUT program.
Remote sellers who are required to collect and remit tax should do so on all sales of taxable products and services into Alabama unless an exemption applies (e.g., resale certificate, exemption certificate, direct pay permit).
If a remote seller registers for a SSUT account based solely on the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., the remote seller is not required to collect and remit SSU tax on sales that occurred prior to October 1, 2018. A remote seller may voluntarily register and collect simplified sellers use tax at any time prior to October 1, 2018.
Remote sellers should collect and remit tax on all taxable sales into Alabama, including sales made online, through a marketplace, catalog sales, etc. starting October 1, 2018.
SSUT participants are required to file monthly returns and remit monthly payments through the MAT (myalabamataxes.alabama.gov) online system. Participants may also apply to make payment by ACH Credit payment method.
SSUT returns are filed through Alabama’s online MAT system. Payments are also made through the MAT system or through the ACH Credit payment method. The website for MAT is: myalabamataxes.alabama.gov.
The SSUT 8% flat tax applies to all sales regardless of the locality shipped to in Alabama. The collection and remittance of the simplified sellers use tax relieves the eligible seller and the purchaser from any additional state and local sales or use tax on the transaction.
SSUT participants are not subject to audit by an Alabama locality for SSUT, but may be audited by the Alabama Department of Revenue.
Purchasers in Alabama may see an increased number of remote sellers that are charging simplified sellers use tax.
As before, if a remote seller does not charge simplified sellers use tax on a taxable sale in Alabama, the purchaser should report use tax on the purchase price through consumers use and local tax returns. An individual may also report the use tax on his or her individual income tax return.
The marketplace seller or the customer may request a refund of overpaid taxes by clicking on the “Request a SSUT Refund” link on the the My Alabama Taxes homepage: myalabamataxes.alabama.gov.
The following resources are available on the Department’s SSUT webpage: https://revenue.alabama.gov/sales-use/simplified-sellers-use-tax-ssut/
Notice: Tax Guidance for Online Sellers (07/03/2018)
Notice: Marketplace Facilitators and Sellers (05/01/2018)
SSUT Law (§40-23-191 through §40-23-199)
SSUT Rules (810-6-2-.90.02 and 810-6-2-.90.03)
The Marketplace Facilitator (MPF) Law goes into effect on January 1, 2019. It stipulates that the responsibility for collecting and remitting simplified sellers use tax, or reporting such sales, for online purchases by customers in Alabama falls on the company supporting the marketplace rather than on the individual sellers.
A person that contracts with marketplace sellers to facilitate for a consideration, regardless of whether deducted as fees from the transaction, the sale of the marketplace seller’s products through a physical or electronic marketplace operated by a person, and engages:
(a) Either directly or indirectly, through one or more affiliated persons in any of the following:
1. Transmitting or otherwise communicating the offer or acceptance between the purchaser and marketplace seller;
2. Owning or operating the infrastructure, electronic or physical, or technology that brings purchasers and marketplace sellers together;
3. Providing a virtual currency that purchasers are allowed or required to use to purchase products from the marketplace seller; or
4. Software development or research and development activities related to any of the activities described in paragraph b, if such activities are directly related to a
physical or electronic marketplace operated by a person or an affiliated person, and
(b) In any of the following activities with respect to the marketplace seller’s products:
1. Payment processing services;
2. Fulfillment or storage services;
3. Listing products for sale;
4. Setting prices;
5. Branding sales as those of the marketplace facilitator;
6. Order taking;
7. Advertising or promotion; or
8. Providing customer service or accepting or assisting with returns or exchanges.
A seller that is not a related party, as prescribed in Section 40—23H190(c), to a marketplace facilitator and that makes sales through any physical or electronic marketplaces operated by a marketplace facilitator.
The collection and remittance of simplified sellers use tax relieves the marketplace facilitator, the marketplace seller, and the purchaser from any additional state or local sales and use taxes on the transactions for which simplified sellers use tax was collected and remitted.
(a) Marketplace sellers making sales on or through a non-participating marketplace facilitator’s marketplace are not relieved of their obligation under the laws of this state to remit sales or use taxes on transactions made on or through a non-participating marketplace facilitator’s marketplace, on or through the marketplace seller’s own electronic sales platform, or at the marketplace seller’s retail location in this state.
Alabama requires remote sellers with the qualifying amount of sales into Alabama, including sales through a marketplace, to begin collecting simplified sellers use tax on October 1, 2018. To ensure the remote seller’s registration is properly processed by October 1, 2018, the remote seller should complete the registration at least three weeks prior to October 1, 2018. The remote seller may indicate a first sales date of October 1, 2018 on the application. A remote seller may register and begin collecting tax at any time prior to October 1, 2018, but the first date of collection should be consistent with the first sales date indicated on its application.
Effective January 1, 2019, any marketplace facilitator who does not collect and remit sales, use, or simplified sellers use tax on Alabama retail sale transactions of qualifying amounts shall be required to report such retail sales and provide customer notifications, within constitutional limitations, pursuant to Section 40-2—ll(7)(b) and rules promulgated thereunder. MPFs electing to report should complete the SSUT application and indicate their choice beside the question pertaining to this.
The SSUT 8% flat tax should be collected and remitted on all sales of taxable products and services into Alabama unless one of the following is presented to the seller or the marketplace facilitator (resale certificate, Alabama exemption certificate, Alabama direct pay permit).
If a Marketplace Facilitator is already an SSUT participant who has been reporting their own sales and intends to start collecting and remitting on behalf of their 3rd party sellers, they may indicate this on the monthly return that is filed in MAT by clicking “Yes” next to the question “Are you a Marketplace Facilitator and need to report sales tax collected from sales made by your Marketplace Sellers?” Once “Yes” is selected, additional fields will appear on the return where the sales of 3rd party marketplace sellers may be entered.
New applicants should complete the application and return it to the Department. An email notification will be sent either approving or denying the SSUT application and will include further information.
The SSUT application is located on our website at https://revenue.alabama.gov/wp-content/uploads/2017/07/SSUT-Application.pdf.