Alabama retailers register with the Alabama Department of Revenue for a Sales Tax License through My Alabama Taxes. Registration is free, but every license has to be renewed each year between Nov. 1 and Dec. 31. Remote sellers with more than $250,000 in Alabama retail sales that sell outside participating marketplaces register for a Sellers Use Tax or Simplified Sellers Use Tax account instead.
You need an Alabama Sales Tax License from the Alabama Department of Revenue (ALDOR) if you run an in-state retail business. Sales tax applies to retail sales of tangible personal property made by businesses located in Alabama.
Out-of-state sellers that have to register use a different account. ALDOR doesn't issue sales tax licenses to remote businesses with no Alabama location. Those businesses register for a Sellers Use Tax or Simplified Sellers Use Tax (SSUT) account instead.
If you sell into Alabama from outside the state, you have to collect tax once you pass the Alabama economic nexus threshold. That's retail sales of tangible personal property into Alabama of more than $250,000 a year, based on the previous calendar year. Alabama has no transaction-count threshold.
Once you're over the threshold, you can meet the requirement in one of three ways, and two of them require registering with ALDOR:
Count the retail sales you make directly, whether or not they're taxable. Leave out:
Alabama measures the threshold on the previous calendar year's sales. If your retail sales into Alabama passed $250,000 last year, you need to be registered and collecting this year.
For example, if you pass $250,000 in May, register before Jan. 1 so you can collect starting the next year. Allow at least 3 to 5 business days for ALDOR to issue your account number.
Sellers under the threshold can still apply to join SSUT voluntarily.
If you crossed the threshold in an earlier year and never registered, a voluntary disclosure agreement may limit your exposure for back taxes.
Any physical nexus in Alabama means you must register, regardless of your sales volume. The $250,000 threshold applies only to remote sellers.
If you have a business location in Alabama, you need a Sales Tax License before you make retail sales there.
Out-of-state businesses with no Alabama location register for a Sellers Use Tax account if they have any of these:
If you're out of state and unsure whether you have nexus, you can submit a nexus questionnaire in My Alabama Taxes. ALDOR emails a determination within 30 days.
Alabama's marketplace facilitator law makes marketplaces that meet the $250,000 threshold choose one of two options. They either collect SSUT for their sellers or send customers notices and report those sales to ALDOR.
Whether you still need to register depends on the marketplace and on where you're based:
Sales through your own website or store aren't covered by a marketplace's collection. Those sales count toward your $250,000 and still require registration once you cross it.
If every Alabama sale goes through a participating marketplace, you don’t need to register, even if the marketplace stores your inventory in Alabama, as it does for some Amazon FBA sellers.
If you also sell directly, such as through your own website, inventory stored in Alabama likely gives you sales tax nexus in Alabama. Plan to register for those direct sales at any volume and collect at full state and local rates, since SSUT is only for sellers without a physical presence in Alabama.
Corporations, partnerships, LLCs, and other registered entities need to register for sales tax with the Secretary of State first. The application asks for the number the Secretary of State assigns.
Sole proprietors don't need to register with the Secretary of State. If you'll operate under a name other than your own, confirm that the trade name is available.
ALDOR lists these items on its tax account registration FAQ.
There's no paper option. ALDOR requires businesses to register online through My Alabama Taxes.
ALDOR's My Alabama Taxes help page lists each section of the registration in order. The steps below follow it.
You don't need a login to register. Go to My Alabama Taxes and, in the Businesses panel, select Register a Business/Obtain a New Tax Account Number.
If you already have a My Alabama Taxes login, go to the Accounts tab and select Register Additional Tax Types/Obtain a New Tax Account Number.
The first screen, Before You Begin, warns that the form may take over half an hour to complete.
Tip: Don't use your browser's back and forward buttons while you fill out the application. Use Save Draft if you need to stop and come back later.
On Enter Your ID, select your Type of Business Entity and enter your FEIN. If you choose Sole Proprietorship, the screen asks for your Social Security number instead.
The application also asks whether you're a registered Alabama taxpayer. If you've ever received a Sign-on ID and Access Code for any ALDOR account, enter them. Otherwise, select I do not have a Sign On ID and Access Code.
Choose Sales Tax if you're an in-state retailer. Remote sellers choose Sellers Use Tax or Simplified Sellers Use Tax.
If a tax type you pick requires another one, a note on the screen tells you to add it.
Enter your business name and any DBA, entity subtype, incorporation date, Secretary of State ID, and business address. The fields change depending on the tax types you picked and whether you're already registered with ALDOR.
Under Contact and Ownership Information, enter at least one owner or officer. Select Add an Officer for each additional person.
If you're already registered with ALDOR, this information comes from your existing account.
Under Mailing and Records, add a mailing address and a records address if either is different from your business location.
Each tax type has its own questions, such as your first sales date in Alabama. Answer them for every account you're registering.
If the Nexus Questionnaire appears, select each statement that applies to your business activities in Alabama.
Some tax types require a payment under Payment Information, and the application isn't processed until it's paid. The Sales Tax registration itself is free.
Check the Registration Summary, fix anything wrong, and select Submit.
You'll get a confirmation number when you submit. Save it for your records.
ALDOR takes 3 to 5 business days to process the application and issue your account number. Don't submit another application while you wait, since that can cause delays.
ALDOR mails your Sales Tax License. It also mails a Sign-on ID and Access Code. You enter them under Access Existing Tax Accounts to connect the new account to your My Alabama Taxes login.
To create a login, select Create a My Alabama Taxes Account on the home page. You'll need an email address you can verify and two sign-in methods, one of them a password.
An Alabama Sales Tax License is free. ALDOR doesn't charge to register a tax account or to renew the license each year.
County privilege licenses and city business licenses are separate from the Sales Tax License and have their own costs. They're covered in the business licenses section below.
If you'll sell beer, wine, or tobacco products, you need a one-time $25,000 surety bond when you apply for a new license. The same applies if you renew an expired or canceled license. The bond has to stay in place for two years.
ALDOR can waive the bond if a related party or member of your controlled group already holds a license and complies with its requirements. Use ALDOR's Sales Tax Surety Bond form.
Other businesses don't need a bond to register. ALDOR can require one later from any licensed retailer that falls behind on sales tax: at least $25,000, or three months of tax if that's more.
You get an account number 3 to 5 business days after you register online. ALDOR doesn't publish a separate time for remote seller or SSUT accounts.
Your license comes by mail after that. ALDOR doesn't publish a delivery time for it.
SSUT lets eligible remote sellers skip local rate lookups. You collect a flat 8% sellers use tax on every Alabama sale, wherever the customer is.
Collecting SSUT relieves you and your customer of any other state or local sales or use tax on the sale. That means you don't register with individual cities and counties for those sales.
SSUT is for sellers that ship into Alabama from outside the state and have no physical presence there. You have to apply and be accepted before you start collecting the 8% rate.
You stay in the program unless you open a physical business address in Alabama for retail sales or become affiliated with an Alabama retailer. ALDOR also removes participants who don't collect, report, and file on time.
A participant that gains Alabama nexus only by acquiring an in-state business may stay in.
SSUT participants file monthly returns in My Alabama Taxes, due by the 20th of the following month. If you file and pay on time, you can keep a 2% discount on the first $400,000 of tax, up to $8,000 a month.
Customers whose combined state and local rate is lower than 8% can request a refund of the difference from ALDOR, once in any 12 months. You still charge 8%.
ALDOR collects over 200 city and county sales taxes, but not all of them. Some cities and counties collect their own tax or use a private tax administrator.
You register for state-administered local taxes in My Alabama Taxes, along with your state account. For the rest, contact each city and county where you do business to find out whether you need to register.
ALDOR's contact list for all localities shows who administers each local tax: the state, the locality itself, or a private administrator. If a locality where you do business isn't state-administered, get your local taxpayer ID number from it or its administrator.
Once you have your local account numbers, you can file and pay all state and local sales taxes in My Alabama Taxes through ONE SPOT. Enter each locality's ID in the City/County Tax Acct # field of the local tax return table.
ONE SPOT is a filing system, not a registration. It doesn't open local accounts for you.
Alabama Sales Tax Licenses must be renewed every year, along with Sellers Use Tax and SSUT licenses. One renewal covers every license your business holds.
Renewal opens on Nov. 1 and runs through Dec. 31 for the following year. Log in to My Alabama Taxes and select Renew Tax Account License on your account. You can also go to the Tasks tab and select the Annual Tax Account License Renewal Required task.
You'll review and update:
ALDOR's step-by-step renewal instructions walk through each screen. If you renew before 4 p.m. Central time on a business day, you can print the new license the next day.
If you don't renew by Dec. 31, your license expires and can no longer be used.
My Alabama Taxes keeps the renewal link open until you complete it, but ALDOR can close the tax account tied to an expired license, and then you'd have to reapply. Beer, wine, and tobacco sellers may need a new surety bond to reapply.
An Alabama Sales Tax License isn't a business license. The Tax Account License is separate from the business license, which renews each October.
You may also need:
You don't need a city business license or delivery license if your gross receipts from the city and its police jurisdiction are $10,000 or less for the year and you have no other physical presence there.
Once you're registered, charge Alabama sales tax: the 4% general state rate plus any local rates. SSUT participants charge the flat 8% instead.
Sales tax returns are due monthly by default. You can request a less frequent schedule based on your state tax for the previous calendar year:
You have to request the change before Feb. 20 of the year it applies to. SSUT returns are always monthly.
You file Alabama sales tax online in My Alabama Taxes. Monthly returns are due by the 20th of the following month.
If you file and pay on time, you can keep a timely filing discount on state sales tax: 5% of the first $100 of tax and 2% of the rest, up to $400 a month. Local taxes that ALDOR doesn't administer may use different discounts.
You have to file a return for every period, even if no tax is due.
Renew every year between Nov. 1 and Dec. 31, as described above. Registration rules differ by state, and many states' permits don't expire.
Yes. Unlike most states, Alabama doesn’t separate the two. Alabama officially calls its resale certificate a Sales Tax License. To get a copy, log in to My Alabama Taxes, open the account, and select Print tax account license.
Out-of-state retailers can buy for resale using the sales tax license from their home state.
It depends on your entity type. Sole proprietors register with their Social Security number. Corporations, LLCs, partnerships, and other entities enter an FEIN on the Enter Your ID screen.
An FEIN is a federal tax ID from the IRS. Your Alabama tax account number is a separate 10-character number from ALDOR.
No, unless you're a wholesale automotive dealer. Other wholesale businesses don't need a sales tax number.
You may still need a certificate of exemption, a consumer use tax account, or another registration, so check with ALDOR's Sales and Use Tax Division.
Your account number is the 10-character number of letters and digits that ALDOR assigns. It appears on every letter ALDOR sends you.
Yes. A change such as a sole proprietorship becoming an LLC creates a new legal entity that must re-register with ALDOR.
The old entity's accounts close effective its last filing period, and its returns have to be filed through that period.
Log in to My Alabama Taxes, open the sales tax account, and send a request through Other Actions… and Ask a question. Include the closing date and reason.
ALDOR won't backdate a closure past the current due period, and you must file any delinquent returns first.
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