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Alabama Issues Use Tax Reminder

  • Feb 26, 2016 | Gail Cole

 Use tax is owed by consumers if sales tax isn't collected at the time of sale.

Many out-of-state retailers who sell to Alabama customers became subject to new tax reporting requirements on January 1, 2016. Many, but not all. Some sellers do not make enough sales or do enough business in the state to trigger a tax reporting obligation. Yet since they still sell to Alabama customers, Alabama tax is owed.

It is the responsibility of Alabama consumers who purchase taxable goods or services from non-collecting out-of-state sellers to remit use tax on those transactions. As explained by the Alabama Department of Revenue:

“Shoppers owe a four percent state use tax on their out-of-state purchases if no tax has been collected by the out-of-state seller. Local taxes also apply if they live in a city or county that levies a local sales or use tax; however, only the four percent state use tax may be reported on their Alabama individual income tax return. The taxpayer should contact the local office for information on how to pay the local use tax.”

Taxpayers who can prove they paid sales tax to another state will not be taxed again, provided the tax paid to another state is equal to the Alabama tax rate. If less tax was paid, taxpayers owe the difference.

Additional information is available on the departmental notice, Don’t Forget to Include the Tax on Online Purchases.

Businesses can simplify sales and use tax compliance in all states by using sales tax software (SaaS). Learn how it works.

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.