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Simplified Sellers Use Tax FAQs

Guidance 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)

 

SSUT Remote Seller FAQs:

1.  What is the effect of the Wayfair decision?

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 retail sales (taxable and nontaxable) 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.

2.  Who is a remote seller?

A remote seller is an out-of-state seller that has no physical presence in Alabama.

3.  Are all remote sellers required to register in Alabama?

All remote sellers directly selling over the $250,000 threshold of total retail sales delivered into Alabama the previous calendar year are required to collect and remit taxes on sales into Alabama beginning on October 1, 2019. 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.

Calculating the $250,000 Threshold:

The calculation of the $250,000 sales threshold for out-of-state sellers and marketplace facilitators provided for in Rules 810-6-2-.90.03 and 810-6-2-.90.04 should only include retail sales made directly by the seller, whether taxable or non-taxable.  Sales that should not be included in the calculation are wholesale sales for resale where the buyer presents an Alabama issued sales tax license/resale certificate and any sales taking place through a SSUT participating marketplace that is collecting Alabama taxes on behalf of the marketplace sellers.

4.  What is the date a remote seller is required to register with Alabama?

Alabama requires remote sellers to begin collecting and remitting on October 1, 2019. To ensure the remote seller’s registration is properly processed by October 1, 2019, the remote seller should complete the registration at least three weeks prior to October 1, 2019. The remote seller may indicate a first sales date of October 1, 2019 on the application. A remote seller may apply or register and begin collecting tax at any time prior to October 1, 2019, but the first date of collection should be consistent with the first sales date indicated on its application.

5.  How do remote sellers register in Alabama?

Remote sellers can apply for participation in the SSUT program, to begin collecting and remitting Alabama’s simplified sellers use tax, by clicking on the “Obtain a new tax account” link on the My Alabama Taxes website:  https://myalabamataxes.alabama.gov.

6.  How are remote sellers that are already registered in Alabama affected by the Wayfair decision?

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.

7.  Are remote sellers liable for tax on all sales into Alabama?

Remote sellers who are required or elect 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) or the sales occur through a SSUT participating marketplace that is collecting Alabama taxes on behalf of the marketplace seller.  The exempt sales and eligible marketplace sales should be included in the Gross Sales Amount and Deductions amount reported on the return.

8.  Are remote sellers liable for tax on sales into Alabama prior to the Wayfair decision?

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, 2019. A remote seller may voluntarily register and collect simplified sellers use tax at any time prior to October 1, 2019.

9.  Are remote sellers required to collect tax on sales made via the Internet and through a marketplace?

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, 2019, with the exclusion of sales taking place through a participating marketplace where the marketplace collects and remits on behalf of its 3rd party sellers. A remote seller who exclusively sells through a participating marketplace is not required to register for a sales/use tax account with the State of Alabama.

10.  What are the requirements for in-state sellers who only sell on participating marketplaces?

An in-state seller who exclusively sells through a participating marketplace, where the marketplace collects and remits on behalf of its 3rd party sellers, is not required to register for a sales/use tax account but should instead apply for an exemption certificate with the State of Alabama. (The in-state seller must have the exemption certificate to purchase items for resale tax exempt.)

11.  How often are remote sellers required to file SSUT tax returns?

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.

12.  How do remote sellers file SSUT returns?

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.

13.  Are remote sellers required to collect county and municipality taxes on their sales into Alabama?

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.

14.  Are remote sellers subject to audits by the Department?

SSUT participants are not subject to audit by an Alabama locality for SSUT, but may be audited by the Alabama Department of Revenue.

15.  What is the effect of the Wayfair decision on Alabama purchasers?

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.

16.  What is the refund process?

The marketplace seller or the customer may request a refund of overpaid taxes by clicking on the “Request a SSUT Refund” link on the My Alabama Taxes homepage:  myalabamataxes.alabama.gov.

17.  Are there resources available for new registrants?

The following resources are available on the Department’s SSUT webpage:  https://revenue.alabama.gov/sales-use/simplified-sellers-use-tax-ssut/

Apply for Simplified Sellers Use Tax Account

Act 2015-448
Act 2017-82
Act 2018-539
Act 2019-382
Notice:  Act 2019-382 – SSUT Amnesty, Class Action Protection, and Clarification of Nontaxable Transactions (07/09/2019)
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)

 

Please check the above website periodically for updates.

 

SSUT Marketplace FAQs:

1.  What is the Alabama SSUT Marketplace Facilitator law?

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.

2.  Who is considered a marketplace facilitator?

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.

3.  Who is a marketplace seller?

A seller that is not a related party, as prescribed in Section 40-23-190(c), to a marketplace facilitator and that makes sales through any physical or electronic marketplaces operated by a marketplace facilitator.  Restaurants, grocery stores, beverage stores, other retail businesses and individuals selling products through a marketplace facilitator platform are considered a marketplace seller.

4.  Are additional state or local sales and use taxes due on marketplace transactions when the MPF elects to collect and remit SSUT?

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.

5.  What is the marketplace seller’s obligation regarding tax collection if the MPF decides to not collect and remit SSUT on the marketplace seller’s behalf, but instead elects to follow the reporting requirements for MPFs?

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 retail sales into Alabama to begin collecting simplified sellers use tax on October 1, 2019. To ensure the remote seller’s registration is properly processed by October 1, 2019, the remote seller should complete the registration at least three weeks prior to October 1, 2019. The remote seller may indicate a first sales date of October 1, 2019 on the application. A remote seller may register and begin collecting tax at any time prior to October 1, 2019, but the first date of collection should be consistent with the first sales date indicated on its application.

6.  What is the MPF’s obligation if they elect to report instead of participating in the SSUT program?

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 40-2-11(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.

7.  What type of sales, if any, are exempt from the collection of SSUT?

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).  Also, the SSUT tax may not be collected and remitted in lieu of the sales and use tax collected by a licensing official. This applies to sales of automotive vehicles, motorboats, truck trailers, trailer, semitrailer, manufactured homes and travel trailers that must be licensed in this state by a local licensing official.

8.  How does a Marketplace Facilitator apply for participation in the SSUT program?

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 process.  An email notification will be sent either approving or denying the SSUT application and will include further information.

Apply for Simplified Sellers Use Tax Account