COVID-19 sales tax relief in Alabama

Alabama was one of the first states to provide sales tax relief to certain businesses adversely affected by the new coronavirus (COVID-19). 

For the February, March, and April reporting periods, the Alabama Department of Revenue is waiving late payment penalties for the following businesses in the event they’re unable to pay state sales taxes due to COVID-19:

• Small retail businesses whose monthly retail sales during the previous calendar year averaged $62,500 or less
• Restaurants and other taxpayers engaging in NAICS Sector 72 business activities
• Lodgings taxpayers

The late payment penalties for state sales tax and lodgings taxes will be waived for through June 1, 2020. This relief does not apply to local sales or local lodgings taxes.

The department will work with taxpayers to develop payment plans that will allow them “to pay outstanding liabilities for February, March, and April 2020, while navigating any other impacts of the coronavirus on their businesses.”

Though this amounts to a payment extension, it’s not a filing extension: Taxpayers must still file returns by the due date for each reporting period.

Additionally, there’s no waiver for the 5% interest that applies to late sales tax payments. 

Help may also be available for businesses that don’t qualify for the automatic relief. The department will determine relief on a case-by-case basis. Affected taxpayers should contact the Sales and Use Division at 334-242-1490 to request relief.

Like most other states, Alabama also extended the state income filing and payment due date from April 15 to July 15, 2020. The July 15 due date also applies to the following:

• Business Privilege Tax (BPT)
• Financial Institution Excise Tax (FIET)
• First and second quarter estimated payments for the 2020 tax year

Additional information is available at Alabama Department of Revenue COVID-19 Updates.

See our COVID-19 tax news and resources hub for more information about tax relief in other parts of the country and world.