Our guide to Alabama sales tax is an in-depth look at what a business needs to know to get started managing sales tax compliance in Alabama.

This guide covers the fundamental steps required to register your business, file sales tax returns, and remit collected sales tax. Details such as renewal requirements, filing deadlines, cancelation policies and other hard to find information is included to help you save time and avoid costly penalty and interest payments.

We conclude with valuable Alabama Department of Revenue contact information and links to important forms and resources.

Alabama General Sales Tax Info

Sales tax is a tax paid to a governing body (state or local) for the sale of certain goods and services. First enacted in the United States in 1921, sales tax dates back to ancient Egyptian times where paintings depict the collection of tax on commodities. Alabama first adopted a general state sales tax in 1936. Since that time, the rate has risen to 4%.

As a business owner selling taxable goods or services, you act as an agent of the state of Alabama by collecting sales tax from purchasers and passing it along to the Department of Revenue. This is an important point worth emphasizing. Any sales tax collected from residents belongs to the Department of Revenue. As a business owner, it is your responsibility to manange the sales tax you collect to remain in compliance with state laws and avoid penalties and interest.

Streamlined Sales Tax

At this time, Alabama is not a Streamlined Sales Tax member.

State Sourcing

Alabama is a destination-based state. Destination-based states are those where the transaction location is defined as the customer delivery location rather than the shipping location of the business. As a seller, this means you are responsible for applying the sales tax rate determined by the ship-to address on all taxable sales.

Nexus in Alabama

Establishing a substantial presence within a state is a concept known as “nexus” and is the deciding factor for whether the state governing body has the legal authority to require your business to collect sales tax. The two main principles most closely linked to nexus and sales tax (especially multistate sales tax) are the Due Process Clause of the 14th Amendment to the U.S. Constitution and the Commerce Clause, Article 1, Section 8 of the U.S. Constitution.

Nexus in Alabama can be triggered by a number of factors. The most common include having a physical location (office, warehouse, plant, etc.) within the state, having employees within the state, or conducting marketing activities within the state.

More recently, internet commerce has sparked debate over what can trigger nexus and where sales tax should be collected. For example, Fulfillment by Amazon merchants may find their products stored in Amazon warehouses across the country. This presence of physical goods in states triggers nexus and expands the complexity of managing your sales tax compliance.

If you have any questions about whether your business has nexus in Alabama, we encourage you to reach out to Avalara Professional Services for a complete nexus review.

Registering for an Alabama Sales Tax License

Prior to selling taxable goods or offering taxable services in Alabama, a business that has established nexus within the state is required to register for an Alabama Sales Tax License.

Register Online

Businesses may register for an Alabama Sales Tax License online by visiting My Alabama Taxes and following the instructions provided. The Alabama Department of Revenue recommends all new businesses register online. It’s fast, free, and more reliable than other options.

Register by Mail

Businesses may register for an Alabama Sales Tax License by downloading, completing, and mailing the Department of Revenue Combined Registration/Application (Form COM-101) to the following address: Alabama Department of Revenue, Business Registration Unit, PO Box 327100, Montgomery, AL 36132-7100

If you need assistance with completing the Alabama registration form, call (334)242-1584.

Register in Person

Business owners may register for a Alabama Sales Tax License in person by visiting a local Alabama Department of Revenue office.

Registration Cost

The cost to register for an Alabama Sales Tax License is $0

Renewal Requirements

Alabama Sales Tax License must be renewed every . To renew, a new registration must be completed. Please refer to the Registration Options above.

Filing Sales Tax in Alabama

After your business has started collecting Alabama sales tax, you’ll need to understand the process of filing state tax returns. Filing a sales tax return is the process of reporting the total amount of sales tax collected during a specific period (assigned based on the amount of sales tax you’ve collected in the prior year) to the Alabama Department of Revenue. It is a seperate step from remitting (paying) collected tax to the state governing body.

Filing Online

The Alabama Department of Revenue recommends all taxpayers filing sales tax file online. It’s faster, more reliable, and free.

To file your return online, visit My Alabama Taxes (MAT) and follow the instructions provided.

NOTE: Alabama Department of Revenue Rule 810-1-6-.12 mandates state sales tax be filed electronically.

Filing by Mail

The Alabama Department of Revenue no longer supports state sales tax filing by mail.

Zero Tax Filing

All businesses with active Alabama Sales Tax Licenses are required to file on time returns regardless of whether any tax was collected. Failure to do so may result in penalty fees.

Filing Schedule and Due Dates

Based on the total sales tax collected, businesses are assigned a filing frequency. Of course, the government will always accept payments sooner than required so filers may accelerate payments if they choose.

Extended Due Dates should be used in the event of a Assigned Due Date falling on a weekend or federal holiday.

Annual Filing

Tax Period Assigned Due Date Extended Due Date
2015 January 20, 2016 January 20, 2016

Quarterly Filing

Tax Period Assigned Due Date Extended Due Date
Q1 (Jan – Mar) April 20, 2015 April 20, 2015
Q2 (Apr – Jun) July 20, 2015 July 20, 2015
Q3 (Jul – Sep) October 20, 2015 October 20, 2015
Q4 (Oct – Dec) January 20, 2016 January 20, 2016

Monthly Filing

Tax Period Assigned Due Date Extended Due Date
January February 20, 2015 February 20, 2015
February March 20, 2015 March 20, 2015
March April 20, 2015 April 20, 2015
April May 20, 2015 May 20, 2015
May June 20, 2015 June 20, 2015
June July 20, 2015 July 22, 2015
July August 20, 2015 August 20, 2015
August September 20, 2015 September 20, 2015
September October 20, 2015 October 21, 2015
October November 20, 2015 November 20, 2015
November December 20, 2015 December 20, 2015
December January 20, 2016 January 20, 2016

Penalties and Interest

Taxpayers that fail to file sales tax returns on or before the assigned due date are subject to a “Failure to timely file” penalty equal to 10% of the outstanding sales tax or $50, whichever is greater.

Payments received late are subject to a penalty equal to 10% of the outstanding tax plus interest.

Department of Revenue Contact Info

Need help? You can use the any of the following methods to contact the Department of Revenue. Wait times for phone calls may be long so plan accordingly.

Mail: Alabama Department of Revenue, P.O. Box 327100, Montgomery, AL 36132-7100

Local Phone: (334)242-1490