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Alabama’s Cash Cow

  • Apr 13, 2016 | Gail Cole

 Show me the tax revenue.

Alabama’s Simplified Seller’s Use Tax program may not be making the state rich, but it is generating revenue from out-of-state sellers who are not required to collect Alabama sales and use tax. So it’s doing what it’s supposed to do.

Program participants remit a flat 8% seller’s use tax on Alabama sales rather than the actual combined state and local rate (which is often higher than 8%). The Alabama Department of Revenue reports that 39 companies currently participate in the program and additional applications are under review. Approximately $460,000 in use tax revenue has been collected through the program to date (more than $300,000 in March 2016 alone). According to a progress report on the program, “ADOR officials seemed pleased with those statistics.”

Recently enacted legislation enables eligible sellers to participate in the program even after establishing a physical presence in the state, provided they were participating in the program for at least six months prior to that. Certain program participants will also be allowed to continue to collect and remit the flat 8% rate if federal lawmakers or the United States Supreme Court authorize states to collect sales and use tax from remote sellers. Consider this an incentive to participate sooner rather than later.

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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.