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Tax Professionals to Alabama: Don’t Complicate Sales Tax


 Alabama may redefine what triggers nexus.

The Tax Executives Institute, Inc. (TEI), the “preeminent association of tax professionals worldwide,” has nexus threshold for state and local sales taxes.”

In the letter, TEI explains that “[f]or decades, Alabama has applied a harmonized rule requiring businesses to collect and remit both state and local sales and use taxes only when the business has ‘substantial nexus’ with both Alabama and the local jurisdiction.”

Proposed Regulation 810-6-5-.04.02, however, would “impose a lower and amorphous nexus threshold for local sales and use taxes….” If enacted, it would require any business that ‘purposefully direct[s] its business activities towards the consumers of that jurisdiction” to collect and remit sales tax.

TEI stresses that such an approach “creates an undue administrative burden on businesses with minimal operations in the county seeking to impose its tax….” Furthermore, there’s a good chance any such regulation would run smack into “U.S. constitutional limitations on state and local taxing powers.”

The Department of Revenue held a hearing on the proposed regulation on June 11, 2013. The outcome of the hearing has yet to be revealed.

While Alabama considers a regulation that would arguably complicate its sales tax law, Congress is considering the Marketplace Fairness Act of 2013, legislation that would require states to simplify their sales tax law before they could obligate remote vendors to collect sales tax.

Are you prepared for upcoming sales tax changes?

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.