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Sellers Use Tax

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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.

State sellers use 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.
  • 4% of the gross proceeds of sales of all tangible personal property, other than that listed previously and specifically exempted by law.

When is the sellers use tax due?

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 

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?

No discounts apply for timely filing.

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 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.

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.