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How much is alabama sales tax

how much is alabama sales tax

Click the state button to download your tax table

Click the state button to download your tax table

You have your rates, now what?

Do you know where and when you are required to file? Is your business properly registered? Our free State Tax Guides have the answers you're looking for.

Our guide to Alabama sales tax is an in-depth look at what a business needs to know to get started managing sales tax compliance in Alabama.

This guide covers the fundamental steps required to register your business, file sales tax returns, and remit collected sales tax. Details such as renewal requirements, filing deadlines, cancelation policies and other hard to find information is included to help you save time and avoid costly penalty and interest payments.

We conclude with valuable Alabama Department of Revenue contact information and links to important forms and resources.

Alabama General Sales Tax Info

Sales tax is a tax paid to a governing body (state or local) for the sale of certain goods and services. First enacted in the United States in 1921, sales tax dates back to ancient Egyptian times where paintings depict the collection of tax on commodities. Alabama first adopted a general state sales tax in 1936. Since that time, the rate has risen to 4%.

As a business owner selling taxable goods or services, you act as an agent of the state of Alabama by collecting sales tax from purchasers and passing it along to the Department of Revenue. This is an important point worth emphasizing. Any sales tax collected from residents belongs to the Department of Revenue. As a business owner, it is your responsibility to manange the sales tax you collect to remain in compliance with state laws and avoid penalties and interest.

Streamlined Sales Tax

At this time, Alabama is not a Streamlined Sales Tax member.

State Sourcing

Alabama is a destination-based state. Destination-based states are those where the transaction location is defined as the customer delivery location rather than the shipping location of the business. As a seller, this means you are responsible for applying

the sales tax rate determined by the ship-to address on all taxable sales.

Nexus in Alabama

Establishing a substantial presence within a state is a concept known as “nexus” and is the deciding factor for whether the state governing body has the legal authority to require your business to collect sales tax. The two main principles most closely linked to nexus and sales tax (especially multistate sales tax) are the Due Process Clause of the 14th Amendment to the U.S. Constitution and the Commerce Clause, Article 1, Section 8 of the U.S. Constitution.

Nexus in Alabama can be triggered by a number of factors. The most common include having a physical location (office, warehouse, plant, etc.) within the state, having employees within the state, or conducting marketing activities within the state.

More recently, internet commerce has sparked debate over what can trigger nexus and where sales tax should be collected. For example, Fulfillment by Amazon merchants may find their products stored in Amazon warehouses across the country. This presence of physical goods in states triggers nexus and expands the complexity of managing your sales tax compliance.

If you have any questions about whether your business has nexus in Alabama, we encourage you to reach out to Avalara Professional Services for a complete nexus review.

Registering for an Alabama Sales Tax License

Prior to selling taxable goods or offering taxable services in Alabama, a business that has established nexus within the state is required to register for an Alabama Sales Tax License.

Register Online

Businesses may register for an Alabama Sales Tax License online by visiting My Alabama Taxes and following the instructions provided. The Alabama Department of Revenue recommends all new businesses register online. It’s fast, free, and more reliable than other options.

Register by Mail

Businesses may register for an Alabama Sales Tax License by downloading, completing, and mailing the Department of Revenue Combined Registration/Application (Form COM-101) to the following address: Alabama Department of Revenue, Business Registration Unit, PO Box 327100, Montgomery, AL 36132-7100

If you need assistance with completing the Alabama registration form, call (334)242-1584 .

Category: Taxes

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