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Alabama: When Out-of-State Businesses Must Collect Local Sales Taxes


 Alabama update: the seller's responsibility to collect local sales and use taxes.

The Alabama Department of Revenue has reworked the state local nexus rule and posted it on its website. Seller’s Responsibility to Collect County and Municipal Sales and Use Taxes explains when a business must collect and remit sales and use tax in local jurisdictions, “whether or not that business has a physical location in the state.” Local jurisdictions refer to municipalities, special tax districts, police jurisdictions and counties in Alabama.

The same threshold is used both to determine whether a seller must collect and remit the state sales and use tax and whether a seller must collect and remit local sales and use taxes. In other words, when a sales transaction triggers a state sales or use tax collection obligation, it also triggers a collection obligation for the corresponding local sales and use tax. Much hinges on “the contacts the seller has with each local jurisdiction where local sales or use tax is due.”

However, a seller lacking physical presence within the local jurisdiction sufficient to create an obligation to collect and remit state sales or use tax” may “avoid the responsibility for collecting and remitting local sales or use tax….” How to determine that? Sellers must refer to Rule 810-6-2-.90.01, Seller’s Responsibility to Collect and Pay State Sales Tax and Seller’s Use Tax. Information is also available on the blog, Alabama Seller Nexus Rule.

Remote sellers must collect county and municipal sales and use taxes in Alabama beginning January 1, 2014.

States and local governments frequently update and alter sales and use tax rates, rules and regulations. An automated sales tax solution helps you stay on top of them all.

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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.