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Sales Tax

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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 

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.

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 

Do I need to file a sales 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.

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 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.

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, 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.

E-Filing Payment & Assistance

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