Simplified Sellers Use Tax

Since Oct. 1, 2015, retailers without stores in our state have been able to voluntarily collect and remit a use (sales) tax from Alabama customers.

As of Feb. 28, 2017, 92 remote sellers without a physical retail presence in Alabama had signed up for the voluntary program, according to the Alabama Department of Revenue.

Under the Simplified Seller Use Tax Remittance Act (Act No. 2015-448), remote sellers without a retail presence in Alabama collect a flat 8-percent use tax from Alabama residents who buy their merchandise. The law’s legislative sponsors were Sen. Trip Pittman, R-Daphne, and Rep. Rod Scott, D-Fairfield.

Sellers keep 2 percent of the total collected if they remit monthly tax payments on time.

Where the revenue goes:

  • 50 percent to the state. Of that, 75 percent goes to the General Fund; 25 percent to the Education Trust Fund.
  • 25 percent to counties, shared proportionally by population.
  • 25 percent to municipalities, shared proportionally by population.

2016 Actions
On Jan. 1, 2016, the Alabama Revenue Department, through a rule, began requiring remote sellers with more than $250,000 in retail sales of tangible personal property into Alabama to collect sales tax on transactions with Alabama customers. That rule requires such retailers to register for a license and collect and remit sales/use tax to the state. The rule also allows those sellers to utilize the simplified, flat 8-percent use tax program established by the 2015 law.

In June, 2016, Newegg Inc. filed an appeal with Alabama Tax Tribunal related to the enforcement of the rule. That case is currently in the discovery process with briefs due in late summer to early fall 2017.

In the 2016 regular session, the Alabama Legislature expanded the 2015 law. Based on Act No. 2016-110, eligible remote sellers can continue to participate in the state’s voluntary sales tax collection program and collect the flat tax rate, even if federal efairness legislation passes. Under this revision, the remote retailers also must have been in the voluntary program for at least six months before establishing a physical presence in the state.

Through September 2016, $4.3 million in new revenue had been collected as a result of the rule and the voluntary program.

Amazon began participating in the program on Nov. 1, 2016.

Between October 2016 and February 2017, the state collected almost $20 million through the program, Revenue Commissioner Julie Magee said. That puts total collections since the program began at $24 million.

Magee estimates the state will collect $40 million from the Simplified Sellers Use Tax during the 2017 fiscal year.

Last updated: Feb. 28, 2017