Alabama’s new sales tax rules for remote sellers
- Jul 6, 2017 | Gail Cole
Alabama amended its Simplified Sellers Use Tax Program as of July 1, 2017. The program facilitates sales and use tax compliance for remote retailers that lack a physical presence in the state, thereby encouraging them to comply. Instead of collecting and remitting according to a variety of local sales tax rates, participants collect and remit a flat 8 percent sellers use tax on all sales made into Alabama.
- Requires non-collecting remote sellers to report retail sales and customer notifications, “within constitutional limitations”
- Removes the six-month deferral restriction on eligible sellers (participants may remain in the program unless the seller establishes nexus)
- Allows the Department of Revenue to disclose the names of participating eligible sellers, as well as the dates they started and/or ceased participating in the program
- Allows the department to initiate monthly distributions of Simplified Sellers Use Tax collections
Additional information is available from the Alabama Department of Revenue.
New exemption for small sellers with no physical presence
Another new law, Act 2017-415, exempts businesses from the purchase of a delivery license “if its deliveries do not exceed $5,000 per year and the business has no physical presence in the municipality or its police jurisdiction.” The act also specifies that the interest rate on past due taxes is as provided by general law, and prohibits counties and municipalities from charging interest at the rate of 1 percent per month. Additional information.
States want remote sales tax revenue
Alabama isn’t the only state looking to increase sales and use tax collections from remote retailers, though it was one of the first to do so. As of January 1, 2016, Department of Revenue Regulation 810-6-2-.90.03 requires remote retailers with a substantial economic presence in Alabama to collect and remit tax. The regulation was designed, in part at least, to be challenged, and it is currently making its way through the courts. If all goes as state officials hope, Alabama will be permitted to defend its regulation before the Supreme Court of the United States. This could pave the way for all states to more easily collect remote sales tax revenue.
In the meantime, numerous states are adjusting existing or enacting new laws to capture more revenue from out-of-state sellers. Some of the most recent changes have been adopted by Louisiana, Maine, and Vermont.