Businesses that sell into Alabama but are based in another state should already know that, on January 1, 2016, new requirements for certain out-of-state sellers making sales into Alabama take effect. If not, take note.
“[O]ut-of-state sellers who lack an Alabama physical presence but who are making retail sales of tangible personal property into the state have a substantial economic presence in Alabama for sales and use tax purposes and are required to register for a license with the Department and to collect and remit tax” when both of the following conditions are met:
- The seller’s retail sales of tangible personal property sold into the state exceed $250,000 per year (based on sales from the previous calendar year); and
- The seller conducts one of more of the activities described in Section 40-23-68, Code of Alabama 1975.
Doing business in Alabama includes the following activities:
- Solicitation of sales through advertising on cable television
- Substantial solicitation of sales and benefitting from “banking, financing, debt collection, telecommunication, or marketing activities in Alabama”
- Any other “contact with the state sufficient enough to permit Alabama to impose a sales and use tax collection requirement under Code § 40-23-68(b)(9)”
The tax may be collected, reported and remitted in the usual way, as set forth in Article 2, Chapter 23 of Title 40.
Alternatively, the seller may use the collecting, reporting and remitting provisions created by the Simplified Sellers Use Tax Remittance Act, which uses one rate, a single jurisdiction, and no exemptions. Learn more about the Simplified Sellers Use Tax Remittance Act and Alabama’s new reporting requirements for exempt sellers.
Sellers who choose not to collect (or are for some reason unable to collect) may be held liable for unpaid sales or use tax.
The simplest way to comply with Alabama’s new requirements for out-of-state sellers is with sales tax software. Learn how it works.