State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

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Alabama (AL)

AL Sales Tax - Name of Tax and General Application:

Alabama imposes a tax on the privilege of selling or renting tangible personal property or furnishing entertainment in the state. This tax is referred to as a "sales tax". In addition to the sales tax, Alabama imposes a tax on the use, storage or consumption of tangible personal property. This tax is referred to as a "use tax". The use tax can't be imposed where sales tax has already been paid.

AL Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

Alabama requires out-of-state retailers to pay use tax on personal property for storage, use or consumption in the state when the retailer maintains a place of business or is registered to collect sales and use tax in the state, has employees or agents in the state, or solicits orders in the state by means of telecommunication, television, broadcasts, mail, etc.

AL Local Tax - Do Localities Impose Tax?

Yes, Alabama imposes local sales tax.

AL Resale Certificate Renewal Agreements:

Alabama does not require a resale certificate in order to purchase tax free at retail. However, a valid sales tax license is required to make tax free purchases at wholesale (a sales tax license from any state is valid within Alabama). Proper records must be kept by both purchaser and seller to prove the wholesale character of the sale.

AL Resale Certificate Renewal Periods

No resale certificate is required in Alabama.

AL Statute of Limitations

The later of three years from the date the return was due or the date the return was filed. If the tax base was understated by more than 25%, the statue of limitations becomes six years from the same dates.