Simplified Sellers Use Tax

BREAKING: Alabama Legislature makes further changes to Simplified Sellers Use Tax. Changes will be effective June 1, 2018. Learn more.

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.

The remote sellers without a physical retail presence in Alabama that have signed up for the voluntary program can be found on the Alabama Department of Revenue website.

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. The most recent briefs in that case were filed in December 2017. Responses were filed Feb. 8, 2018. The Revenue Department filed a motion asking the tribunal to hold the case pending the U.S. Supreme Court’s decision in South Dakota v. Wayfair, which is scheduled for oral arguments April 17. The Alabama Tax Tribunal judge has not yet ruled on the department’s motion.

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.

2017
During the 2017 regular session, the Alabama Legislature again expanded the law. Effective July 1, 2017, based on Act No. 2017-82:

  • The Revenue Department makes monthly, rather than quarterly distributions to local governments.
  • The Revenue Department can disclose the names of remote sellers participating in the simplified seller program. Disclosure of those participating will let local governments know not to consider an audit of those companies as they are already remitting taxes, Revenue officials said.
  • A participant in the simplified seller program no longer must participate for at least six months before establishing a physical presence in the state. This allows those planning to establish a distribution center or a store in the state to immediately begin to collect through the simplified sellers program. Those establishing Alabama distribution centers can continue to participate in the simplified sellers program as long as they don’t have a retail presence in the state, Revenue officials said. Once the seller has a retail presence in the state, they are no longer eligible for the simplified seller program or its flat, 8 percent tax rate.

2018 Changes Take Effect June 1
To learn about the latest changes, go here. This page will be updated soon with provisions included in the 2018 revision.

Collections update provided by the Alabama Revenue Department:

2016 fiscal year: $4,365,240.73
2017 fiscal year: $56,175,711.56
2018 fiscal year through April 30, 2018: $46,412,818.18
Total collections:
(through April 30, 2018)
$106,953,770.47

Last updated: April 30, 2018